The circular economy principles in Dutch housing policy are examined through the intersection of national policies in local governance. The performance agreement between municipality, housing corporation and tenant organisations is a central instrument to achieve municipal housing policy objectives. A case study of Rotterdam shows the dominant discourse revolves around notions of social housing oversupply and the benefits of social mix. The policy goal is to achieve ‘balanced neighbourhoods’ by 2030. This discourse is challenged by actors that dismiss social housing oversupply and rather note a social housing shortage. The dominant discourse is also challenged by the financial capacity of housing corporations to create social housing and the effects of policy on their market segment. An emerging second discourse revolves around the role of circular demolition and how it can fulfil goals at the intersection of housing and climate policy. Circularity is shown to be based largely on the inventory of materials resulting from the demolition of social housing. It is framed not only as a solution to reducing emissions but also as a political issue with negative consequences for the social acceptability of climate policies. Policy relevance The discourses and challenges identified in this case study show policymaking is based on both framing and facts. The social meaning of circular and social housing policy is different for different actors. In the context of demolition of social housing, the Dutch policy instrument of performance agreements is not ideal for developing participation because it is based on policy decisions that lack tenant involvement. Circular demolition (deconstruction) may impact the situation of many actors. Circular demolition could relieve financial pressure on housing corporations from an investment and building cost perspective, given an otherwise suitable policy environment. However, circular deconstruction could reduce the social acceptability of demolition of social housing if the materials ...