"So why were households baptized, just as in the OT all males in the household were circumcised?"
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Households believed in Christ. Peter says that baptism is the ANSWER of a clean conscience toward God. Consciences are not clean prior to faith in Christ. Thus, righteousness is not attributed to believers prior to our faith in Christ, just as righteousness was not attributed to Abraham until he believed God. As Paul says, Abraham was LATER circumcised AFTER he had already been justified by faith.
Circumcision in the OT is the physical act to show the physical separation of God's people from the surrounding heathens, and to show that each Israelite male was part of God's covenant with Israel as a nation. But, as noted in the Epistle to the Hebrews, OT rituals were ineffective with regard to cleansing of the CONSCIENCE. The new covenant in Christ goes much further than the old covenant under the law in that sin is purged from the INSIDE, i.e. from the human heart. That is the spiritual circumcision of the born-again believer. The old covenant animal sacrifices were only the temporary judicial appeasement offered by God to sinners. Circumcision in the OT did NOT justify, i.e. declare righteous, a sinner before God.
Thus, water baptism for a Christian is the outward reflection of that inward cleansing, i.e. "circumcision not made with hands".
***Households believed in Christ.***
It never says that.