Yes, people read to each other. Reading some of Austen and Dickens will tell you that reading aloud was a skill that many people learned to make themselves more congenial. But for this to happen, you have to have a couple of things; cheap reading materials and sufficiently educated people to do the reading. So, before the Guttenberg Press, reading was a luxery. Even afterwards, you need an expanding populace capable of reading to make the production of consumable literature cost effective. Depending upon where you are living and whom you are, you really see this get going at the end of the 1500s and the beginning of the 1600. I would say that for most people, reading is still not all that attainable until the mid-1700s (Exception would be New England, which was settled by the Puritans who believed that the only way to have a relationship with God was through direct reading of the bible. This is why they set up a basic primary school system.)

As to when it died out.... There are still public readings now and then. But I think the introduction of Radio Program, with professional actors, did in the private home reading.