The construction industry’s impact on carbon emissions, pollution, and resource depletion necessitates innovative approaches to reduce environmental harm. This research explores the use of computational design, digital fabrication, and timber as a renewable material to mitigate the construction industry’s environmental impact. Timber is recognized as a low-carbon solution for affordable housing, offering a means to decrease emissions in building construction. This study presents an innovative automated construction workflow that involves human-robot collaboration (HRC) for a discretized timber construction system. To demonstrate the capabilities of the system, a housing design is developed for a specific location in Rotterdam. The research considers the site context as a guideline to establish boundary conditions for implementing the developed construction system. It addresses the issue of affordable housing, transcending the chosen site context, as it is a global concern. The design incorporates circularity principles, including modularity, design-for-disassembly, design-for-reuse, reconfigurability, and extension of material lifespan. A combinatorial design workflow is proposed, focusing on the assembly of generic discrete elements into function-based aggregated structures that can be rearranged over time. In order to prove the concept, an HRC assembly prototype is established to mount the discretized aggregation structure, utilizing demountable connections to join the elements while asking the human participation. This approach enables the reassembly of the structure multiple times, promoting material reuse and extending the structure’s potential. The research contributes to the advancement of the circular agenda in the building industry by implementing essential digital design and manufacturing concepts into an automated construction process. By extending the material life cycle and carbon store, the proposed workflow demonstrates the potential for sustainable and efficient construction practices in the timber housing sector.