What in the world? You are in a relationship with them. You can't live with, sleep in the same bed with, be best friends with, and do sexual stuff with someone and not be in a relationship! What do you think a relationship is?!
You say you don't want a relationship with them but what on Earth would you change if you entered into a "relationship" with them? Just your perspective and a label from the sounds of it.
I feel as though you need to reassess where you're actually at in this. Think about what a relationship means to you and why this person cannot fit that role for you.
And above all, you need to talk to them about this and ask if they think you're in a relationship. Because you might need to "break up" with them regardless of how you feel about it
Yes I think that's the correct interpretation