Why did the children demolish the house?
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The children demolish the house because they could. They do it to prove a point about themselves, that as a neighborhood gang, they were to be taken seriously. It also becomes a matter of challenge--the boys destroy the house to prove to themselves that they had the necessary skill set and discipline to make it happen.
The house also represents a higher social class. Described as a "top hat" in the final scene, the house seems out of place to the children who may want subconsciously to erase reminders of a class system which has no place for them. The destruction becomes their outlet for rebellion against the system.
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