One more child was still unaccounted for, officials said, and three more people were injured.
City officials in the resort town Gearhart said in a statement that two adults were aboard the plane that crashed before 7 a.m., apparently hitting a tree during conditions that were described as foggy with low clouds.
Six people were in the four-bedroom rental home at Gearhart for a family reunion and vacation, city officials said.
A mother and two children were flown to Portland for treatment at a burn center, said Michael Griffiths, executive director of the regional emergency transport consortium Life Flight.
At the house, the bodies of two children had been recovered, but a third was still missing, City Administrator Dennis McNally said.
Names were not immediately made public.
Two more people in the family party had gone out for a walk before the crash and were uninjured, McNally said.
The plane, described as a four-seat Cessna, was owned by a business in nearby Seaside, Aviation Aventures, which had rented it to the pilot, said the city statement. The name of the pilot and passenger were not made public.
McNally said officials believe it had just taken off from the Seaside airport.
An explosion was reported about 20 seconds after the crash, McNally said.
A second house was reported to be heavily damaged. City officials said it was vacant
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."
Gearhart has a population just over 1,000, according to CBS affiliate KOIN 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.