A woman and two additional children were injured.
City officials in the resort town of Gearhart said pilot Jason Ketchson and passenger Frank Toohey, 58, both from Clatsop County, were aboard the plane that went down before 7 a.m., apparently hitting a tree during conditions described as foggy with low clouds.
When the plane crashed, six people were in the four-bedroom rental home at Gearhart for a family reunion and vacation, City Administrator Dennis McNally said. A vacant house next door was also damaged.
The children killed were identified as Julia Reimann, 10, of Beaverton; and Hesam Farrar Masoudi, 12, and Grace Masoudi, 8, both from Denver. A spokeswoman for Denver Health Medical Center, Natalie Moncilovich, said the children's father, Dr. Frederick Masoudi, is a cardiologist at the hospital.
Ruth Jackson-Reimann, 47, and two children, Christopher Reimann, 13, and Sarah Reimann, 11, were flown to Portland for treatment at a burn center, said Michael Griffiths, executive director of the regional emergency transport consortium Life Flight.
The hospital declined to release their conditions, but the Oregonian newspaper said they suffered serious burns.
Jackson-Reimann rescued one of the children and the other surviving child climbed out a window, officials said. Two other adults were out for a walk when the crash occurred.
The owner of the house, Greg Marshall of Portland, told The Oregonian newspaper that the victims arrived Sunday for a planned two-week stay.
The plane, a four-seat Cessna, was owned by a business in nearby Seaside, Aviation Adventures, which had rented it to Ketchson, McNally said.
The plane had just taken off from Seaside Airport and was headed to the southern Oregon city of Klamath Falls. An explosion was reported about 20 seconds after the crash.
Tourist magazine editor Rebecca Herren lives about a block and a half from the crash site and said she was in bed between 6:30 a.m. and 7 a.m.
"I heard the plane above and thought, 'Gosh, it's awfully low and awfully early,'" she said.
The explosion shook her house and was followed by two smaller explosions, she said. The city said homes were rocked for up to a half-mile away.
Part of a golf course separates her house from the crash site, Herren said, and on a clear day she would be able to see it.
"Because it was so foggy, I couldn't see any smoke plumes," she said. "Then I heard the sirens start."
The cause of the crash has not been determined. Federal Aviation Administration and National Transportation Safety Board investigators were on the scene.
"It's just a devastating sight," McNally said. "I've never seen anything like it."
Seaside has long been a quiet enclave for wealthy Oregonians on vacation. It once was connected with regular train service to Portland. Today, it keeps businesses confined to the flanks of the coastal highway, U.S. 101, to keep residential areas quiet.
In the early 1900s, James Beard, the dean of American cooking, spent summers in Gearhart with his mother and reported it was where he learned to appreciate fresh shellfish.
Gearhart has a population just over 1,000, according to CBS affiliate KOIN-TV in Portland. About 500 more people are in town this time of year, according to mayor Ken Smith, and about 40 percent of the homes in Gearhart are second homes, many vacation rentals.