Urban renewal in southwestern China is transforming traditional timber dwellings while heritage conservation remains a parallel demand. Demolition of vernacular buildings produces solid wood components, prompting questions of circular use. This study investigates timber circularity in Chongqing through fieldworks, on-site measurements, interviews, and comparative analyses of reclaimed timber markets and reutilized components in modern vernacular architecture. The reclaim stage comprises demolition, transportation, preliminary processing, storage, and shop-based sale, while the reutilization stage involves secondary processing and construction. Findings show that reutilized timber dominates in medium beams, trusses, and large columns, whereas slabs, small columns, doors, and panels are more often provided in reclaim. The reutilized timber is typically longer with smaller cross-sections, reflecting shifts of function and construction in modern vernacular architecture. The circularity system remains at an early stage, largely driven by informal practices, constrained by weak awareness, absent standards, limited platforms, and outdated processing. Nonetheless, it would hold significant potential to evolve into a structured and sustainable framework with policy and technical support.