Translation:My house is between those two houses.
"my house is in between those two houses" doesn't really change anything grammatically and should not be counted as incorrect
Think of it this way. Ser refers to essence (coming from Latin "sum, esse", meaning "to be"), and a house's location is not essential to its "housiness". Estar refers to status (coming from Latin "sto, stare", meaning "to stand"), and a house's location does distinctly refer to its status, namely, where it is located.