That's because the home edition doesn't have IIS that you can install. Only Windows 7 Professional Edition does. I'm not sure you can even get the install for IIS to manually load on Windows 7 Home Edition.
You could check the Cassini web server from UltraDev and see if they still offer it as a free edition.
Update, I may be wrong on the Windows Home "Premium" edition versus the "Basic" edition.
https://www.nullskull.com/q/10419258/iis-is-not-installed-on-windows-7-home-basic.aspx
You'd still need to go to the Control Panel, Programs Features, Turn windows features on and off section to enable IIS. Once installed, you can go set up your localhost web site in IIS and put your web site files under the root of the web site.