Another 28 people were injured in the explosion early on Friday in the village of Dongzhai in Shanxi province, the Xinhua News Agency said.
It said the cause of the explosion was under investigation.
Two residents said the toll was high because people had gathered around the burning house to watch, when a huge explosion hit them.
"The house first caught fire so a lot of villagers were standing around watching when it suddenly exploded," the villager who identified himself only as Li told AFP by phone.
Another resident gave a similar account. "A lot of people were standing around the home to watch the fire and then it exploded," said the resident, who did not want to give her name.
Li and the woman said they did not know what kind of explosives were being stored in the home, which they described as an ordinary one-storey village house.
Ningwu county police said that an investigation was ongoing, but initial reports indicate that the explosion was an accident.
Police refused to rule out that illegally stored explosives may have been involved in the blast.
Shanxi is a major coal-producing area, and frequently suffers fatal accidents blamed on improperly stored explosives for mining.
Many small workshops in China produce explosives, many of them run out of private homes without required licenses and safety equipment.
Last month, in another village in Shanxi, 10 people were killed when a blast destroyed a building where dynamite was being made illegally, according to news reports.
Elsewhere in Shanxi, six people were killed in February when a cache of explosives stored in a house blew up.