The house owner told Aljazeera that the US forces surrounded the area with around 50 armoured vehicles despite him denying Saddam’s presence there.
US forces randomly opened fire at the house. They then entered the house, searched and later completely destroyed it when they did not find Saddam there, the owner said.
Cars and the properties of other people near the targetted house were also damaged in the US operation.
Meanwhile, leaflets urging Iraqis to advocate jihad and not to cooperate with the US-controlled Governing Council were handed out at a Sunni Muslim mosque in Baghdad on Friday by a group calling itself the Liberation Party.
"End the occupation and call for jihad," or holy war, it read. "Do not cooperate with the traitor Governing Council," it stated. The 25-member interim executive picked by the occupation forces "does nothing unless given the order by the Americans," it added.
"We demand that US forces leave Najaf"
--Shia gathering in Najaf
The leaflets, handed out after Friday prayers at the Sunni Abu Hanifa mosque in northern Baghdad, said that the new council aimed to divide Iraq.
In the holy city of Najaf, tens of thousands of Shia Muslims converged on a mosque on Friday to hear firebrand cleric Moqtada Sadr demand US forces leave the city and abolish the Governing Council.
Opposition increases to
Iraqi Governing Council
"We criticise the occupation force for laying siege to the city of Najaf. This is a terrorist act, and we demand that US forces leave Najaf," Sadr, the son of a revered Shia cleric, told masses of followers after prayers at the city's main mosque.
Hundreds of trucks and buses had transported the faithful to Najaf, 180 km south of Baghdad, from the capital and 18 other provinces to hear Sadr's weekly sermon.
Thousands packed into the mosque and the surrounding streets, organised in a disciplined manner and refraining from the heavily anti-US chanting that punctuated last week's gathering.
Sadr, scion of an illustrious family of ayatollahs who resisted Saddam Hussein's rule, electrified Najaf last week with a fiery speech blasting the US occupation.
His challenge to the delicate balance of power led to a tense standoff with the US military. The controversial cleric said US troops besieged his home last Saturday, a claim hotly denied by US commanders in the region.
In April, Sadr was at the centre of a controversy when his supporters were accused of involvement in the murder of the moderate cleric Abdel Aziz al-Khoei, who returned to Najaf from exile.