Peri-urban craft villages are increasingly fragmented by rapid urbanization. Sơn Đồng, a traditional wood-carving village, faces challenges in developing sustainable craft-based housing. This project explores two modes: pure and mixed-use residential. Pure residential functions develop vertically to maximize privacy, while mixed-use functions develop horizontally to enhance interaction. The housing system is organized into five levels: overall development, residential clusters, dwelling units, spatial zones, and spatial-defining shear walls.