Typically, I say you can only construct a house once. From then on, you're improving it.
However, if a house is being torn down to the foundation, I call it a new construction. There's nothing definitive about this, it just works for me/my logic.
You say they are taking it down to the studs. I'd lean toward calling this home improvement. Yes, it's a major renovation, but the floors and studs are still there.