Yes . Under normal circumstances CO is not produced inside house, but this can occur if the house is closed. At night. It will not be made by small flame like lantern or lamp . But it can happen and can rise to toxic levels if the house is closed. eg. cold countries where gas burner heaters are used in night
For that special devices and alarms are made and some use them when there are specially small children.
When CO combines with Red Blood cells it makes it hard for that Red Blood cell to absorb any Oxygen and if this happens for some time our body will be deficient of Oxygen and we will die.