[The ruling on curtains and fabrics with which the walls are adorned]

The answer – and Allah is the One who grants success – is that what appears to me – and Allah knows best – is that this is permissible and there is no objection to it. The proof for that is His saying, Exalted: "Say, 'Who has forbidden the adornment of Allah which He has produced for His servants and the good things of provision?'" [al-Aʿrāf:32]. This is so as long as it is not accompanied by exalting oneself over people or by showing off.
And another proof is His saying, Exalted: "And were it not that mankind would have become one community [of disbelievers], We would have made for those who disbelieve in the Most Merciful – for their houses – ceilings of silver and stairways upon which they ascend, and for their houses doors and couches upon which they recline, and ornaments. And all that is not but the enjoyment of worldly life; and the Hereafter with your Lord is for the righteous." [al-Zukhruf:33–35].
If it is said: It has been narrated that the Prophet (May Allah bless him and his family and grant them peace) tore down curtains that ʿĀʾishah had hung on the walls of her house.
We say: The Prophet (May Allah bless him and his family and grant them peace) disliked that because of what was in them of images, and the Prophet (May Allah bless him and his family and grant them peace) used to dislike the adornment of worldly life, as a refinement of his character by the etiquette of Allah with which He singled him out, in His saying, Exalted: "And do not extend your eyes toward that by which We have given enjoyment to [some] of them – the splendour of worldly life by which We test them. And the provision of your Lord is better and more enduring." [Ṭā Hā:131].
As for what has been narrated from the Prophet (May Allah bless him and his family and grant them peace) in its meaning: “We have not been commanded to cover stones and clay,” this does not indicate prohibition, nor does it entail it.
Furthermore, it has not been transmitted that any of the Muslims disapproved of the kiswa (covering) of the Kaʿbah, neither in the past nor in recent times; rather, the Prophet (May Allah bless him and his family and grant them peace) approved of the covering of the Kaʿbah and did not disapprove of it.
Yes, if that is accompanied by exalting oneself over people, showing off, or the like, then it is forbidden, due to the prohibition of arrogance, pride, and showing off.

Source: Min Thimār al-ʿIlm wa al-Ḥikmah vol.2