Omar al-Abed, who is 19 years old, was shot and wounded by an off-duty soldier at the scene of the July 21 attack. He was later arrested.
Israeli Prime Minister Benjamin Netanyahu called him a "beast" who was incited to hate Jews.
Today's actions follow similar destruction of homes of Palestinians who carry out attacks on Israelis. The destructions are meant as a deterrent.
Police said they will charge five members of al-Abed's family for failing to stop him from carrying out the stabbing. The five were arrested and face prosecution for failing to prevent a crime.
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