All perfect praise be to Allaah, The Lord of the Worlds. I testify that there is none worthy of worship except Allaah, and that Muhammad, sallallaahu ‘alayhi wa sallam, is His slave and Messenger.
We do not know of any Islamic impediment in decorating the houses and lighting the with lanterns and the like out of joy and happiness for the beginning of the month of Ramadan. The fact that the Salaf (righteous predecessors) did not do that is not enough to describe it as an innovation, because the one who decorates his house at the beginning of Ramadan does not believe that this act of decoration is an act of worship; rather, this is like good customs which represent joy and happiness with an act of worship.
There is no doubt that being happy during acts of worship and during the seasons for performing such acts is considered veneration of the symbols of Allaah, which is itself an act of worship.
Shaykh ‘Atiyyah Saqr said (according to the Fataawa of the Egyptian House for Iftaa’): "The Islamic ruling on it (hanging lanterns) is that it is permissible as there is no explicit text that prohibits it, and if the intention is to express happiness for the coming of Ramadan or the announcement of the time of Sahoor (pre-dawn meal), then this act is raised to the degree of being desirable, and actions are judged according to intentions."
Allaah Knows best.