Peter Saywell, who lives across the street, said flames were "miles above the roof" by the time he was woken by fire sirens.
Marton firefighters arrived with two appliances and were there for nearly two hours.
The fire started in the front porch of the house and moved into the lounge, Marton Chief Fire Officer Paul Whitehead said. Luckily, the door between the lounge and the rest of the house was closed.
The family had been in Marton for three months, living in the house owned by Canterbury Meat Packers. It had two smoke alarms but neither of them contained batteries.
Mr Whitehead hoped people hearing about the fire would take note and keep their own smoke alarms working.
Because it started in the front porch, the fire was deemed suspicious and it was investigated by fire risk management officer John Hotter. He discovered that it was caused by an electrical fault.