The raid was part of a police and army hunt for those involved in a drive-by shooting last week that killed a rabbi from an Israeli settlement outpost, said police spokesman Micky Rosenfeld.
Later Hamas said that it was a man with a similar name, Ahmad Ismail Muhammad Jarrar, 31. who had been killed in the shootout with Israeli forces.
The Israeli army said in a statement on Twitter that Jarrar had used a "self-manufactured weapon".
Israeli security forces raided Jenin Wednesday night, and clashes started midnight and continued until the early morning hours. Two other homes belonging to Ahmed's uncles were also demolished and a third was damaged, family members said.
The police stated that "several" terrorists were arrested at the end of the battle and were turned over to the Shin Bet (Israel's Security Agency) for questioning.
Israeli forces confirmed that a Palestinian suspect in the terror attack in Havat Gilad had been tracked down and shot dead, but did not name him.
Tensions in the region have risen since US President Donald Trump's announcement on Dec 6 recognising disputed Jerusalem as Israel's capital, and at least 18 Palestinians and one Israeli have been killed since.
Hamas accused the Palestinian Authority of assisting Israel's security forces during Thursday's raid.
Hamas initial comment pledged to move on with the "resistance" in which Hamas official Sami Abu Zuhri affirmed that Jenin cell wasn't the first and won't be the last.
According to Hamas, the younger Jarrar, is the son of Nassar Jarrar, a senior Hamas commander in the West Bank and leader of the terror group's forces in Jenin before being killed by Israeli troops in 2002.