Das ist das Haus der Großeltern should be translated as "This [or that] is the grandparents' house." Note the apostrophe after "grandparents", required in English to make the word possessive. Duo counts the translation as correct, but says the apostrophe is a typo.

Obviously, this needs to be corrected. But there is no way to report the error. The only error-reporting possibilities are that the audio is wrong, the dictionary hints are wrong, or the German sentence is unnatural.

As @domlecon pointed out in the discussion for that item, a language-learning site really needs to teach correct grammar, especially on an item like apostrophe use that so many native English speakers screw up.