You can buy special dollhouse carpet, and it's very nice... but you can also use fabric scraps to create realistic looking, inexpensive carpeting. Here are some ideas with pictures to get you thinking! Keep in mind that dollhouse scale is small, so choose fabrics that have small prints and grains.
Here is a room carpeted with a scrap of upholstery fabric:
Here's a room carpeted with some soft, suede-like material:
Velvet and velvet-like material make a plush carpet:
Here, a girl's bedroom and playroom are carpeted with pink fleece (an old baby blanket!) and felt: