A: This is the kind of situation where, in order to avoid unnecessary hurt feelings, honesty might not be the best policy. Think ahead to how you can arrange to see your new friends outside of their home and don't be afraid to use "My child is tired and needs some downtime" as a fallback excuse. Or if one of you has a pet allergy, this reason might also get you out of the situation gracefully.
Our children's new friendships can put us into awkward situations -- and this won't be your last, I'm afraid. We should all ask ourselves to stretch a little to accommodate new friends' lifestyles. It's not up to us to provide unsolicited advice about housekeeping, but ultimately, you should decide what you are -- and aren't -- willing to tolerate when it comes to family friends. (But don't feel guilty about drawing the line at a stinky, filthy house!)