Evervess

Если без использования классов для работы с XML, то примерно так:

$query = mysql_query("SELECT * FROM `$table` SORT BY street, house_number, app_number ");

// Затем в цикле разбираем запрос, и формируем XML
$xml = '<?xml version="1.0" encoding="utf-8"?>' . PHP_EOL;
$prev_street = null;
$prev_house = null;
$prev_app = null;
$prev_acc = null;

while ($row = mysql_fetch_array($query)) {
    if ($prev_acc != null && $row['account'] != $prev_acc) {
        $xml .= '</account>' . PHP_EOL;
    }
    if ($prev_app != null && $row['app_number'] != $prev_app) {
        $xml .= '</apartment>' . PHP_EOL;
    }
    if ($prev_house != null && $row['house_number'] != $prev_house) {
        $xml .= '</house>' . PHP_EOL;
    }
    if ($prev_street != null && $row['street'] != $prev_street) {
        $xml .= '</street>' . PHP_EOL;
    }

    if ($row['street'] != $prev_street) {
        $xml .= '<street name="' . $row['street'] . '">' . PHP_EOL;
        $prev_street = $row['street'];
    }

    if ($row['house_number'] != $prev_house) {
        $xml .= '<house number="' . $row['house_number'] . '">' . PHP_EOL;
        $prev_house = $row['house_number'];
    }

    if ($row['app_number'] != $prev_app) {
        $xml .= '<apartment number="' . $row['app_number'] . '">' . PHP_EOL;
        $prev_app = $row['app_number'];
    }

    if ($row['account'] != $prev_acc) {
        $xml .= '<account id="' . $row['account'] . '" person="">' . PHP_EOL;
        $prev_acc = $row['account'];
    }

    $xml .= '<device id="' . $row['device_id'] . '" value="' . $row['new_meterage'] . '" date="дата" type="1"/>' . PHP_EOL;
}
$xml .= '</account>' . PHP_EOL . '</apartment>' . PHP_EOL . '</house>' . PHP_EOL . '</street>';

echo $xml;

С SimpleXML не работал никогда, но по общей логике должно быть так

foreach($sxml->location->street as $street) {
        foreach($street->house as $house) { //Перебираем дома только на текущей улице
	        $house_number = stripslashes($house->apartment->attributes()['number']);
            echo "<br>'$house_number'";
            $app_number = stripslashes($house->attributes()['number']);
            echo "_'$app_number'";
	        $id = ($house->apartment->account->attributes()['id']);
            echo "_'$id'";
        }     
    }