Locality housing new stadium (5)
I believe the answer is:
arena
'stadium' is the definition.
('arena' can be a synonym of 'stadium')
'locality housing new' is the wordplay.
'locality' becomes 'area' (I've seen this before).
'housing' means one lot of letters goes inside another.
'new' becomes 'n'.
'area' enclosing 'n' is 'ARENA'.
(Other definitions for arena that I've seen before include "Amphitheatre's central space" , "Space for public events" , "O2, for example" , "What the Colosseum was" , "Sit around here being entertained" .)