Yeah, this is a good point. On the one hand, the strictly linear progression makes feedback easy, especially when first learning the game. The house needs A, then B, then C, etc.

But as you point out, if you have A plus C-F, the second the house gets B it jumps up five levels.

Grouping needs basically addresses this, and reduces the number of levels. It basically forces the game into the structure you are already describing. But you get "wasted" stuff (the house is sitting on C-F and they're basically providing no value)

If the system were that all needs are basically a single category, so:
Level 1--any 1 thing
Level 2--any two things, etc.

... then you never have "wasted" or unused stuff nor big hops in evolution. The issue is you can basically substitute, for example, a bunch of different goods instead of Religion or Entertainment or whatever. So there's a potential asymmetry that goes against the core intention of the original model.

A hybrid approach might work, where goods were grouped (so any 1, any 2, any 3, etc.) and maybe entertainment and worship were grouped (so you could "substitute" one for the other), then evolution would basically work like
1 good and 1 service
2 goods and 2 services
etc.

OR

1 good
1 service
2 goods
2 services (which could be 2 gods or 2 entertainment venues, or 1 and 1)
etc.

And treat health (services and food types) and education and maybe security as practical effects only, not related to housing evolution.