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I wouldn't put the house back where it was, you do need to avoid bar chewing if at all possible as he may well hurt himself.
They won't normally sleep in a house on a shelf, they really like to have a nice deep layer of substrate under the house as well as the shredded tissue inside to nest in.
Could you not put the house on top of the substrate or can he still reach the bars if you do that?
If you can get more substrate in the cage then do as they like to dig as much as they like to climb & chew! Maybe half bury a tube or two (cardboard ones are fine something like a pringle tube or something) to give him something else to occupy him & take his mind off the bar chewing.