Holders Chelsea were drawn to play at home and beat City 2-1 in extra time at Staines Town FC's Wheatsheaf Park.
Last year's semi-final between the two sides, which Chelsea also won, was played at a neutral venue - Adams Park.
"An FA Cup semi-final at Staines doesn't sit right with me. It should be a neutral venue," said Houghton, 27.
"I don't understand the reason, how somebody can get an advantage at home.
"We have to congratulate Chelsea and make sure, when it comes to the league games, we're right on it."
England striker Fran Kirby won the game for the hosts in the final minute of extra time, after the regular 90 minutes finished 1-1.
"I think we were the better team. Unfortunately it wasn't meant to be," defender Houghton added. "Chelsea brought a lot of fresh legs on and a lot of experienced players.
"The effort levels and the attitude, we were unbelievable. I'm gutted for the staff because I know how hard we work.
"Now we just use this as motivation to kick our season on even more and try to stay top of the league."
Chelsea will now face Arsenal in the final at Wembley on Saturday 14 May, following the Gunners' 7-0 thrashing of Sunderland.
England and Manchester City Women captain Steph Houghton has questioned why Chelsea Ladies had home advantage in Sunday's Women's FA Cup semi-final.