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The owner of the second house has to smoke blend, because:
15. The man who smokes  blend  has a  neighbor  who drinks  water.
and first house has no neighbors except for the second house.

Once the cigar preference of the owner of the second house is determined, the owner of the third house have to be a Pall Mall smoker the only choice left for him.

The above has the direct consequence that:
6. The person who smokes  Pall Mall  rears  birds.

Finally, the owner of the first has to keep cats, since:
10. The man who smokes  blend  lives  next  to the one who keeps  cats.
and the other neighbor of the blend smoker rears birds.

This completes the solution, leaving for the German the only vacant pet a fish.

 No  1 2 3 4 5
Col yellow blue red green white
Nat Norw Dane Brit Germ Swede
Bev water tea milk coffee beer
Cig Dunh blend PallM Prince BlueM
Pet cat horse bird fish dog


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