"The roof of the coffee shop, which was full of people, also collapsed. We believe there are people still under the debris."
Zeina Khodr, Al Jazeera's correspondent in Iraq, said there was no claim of responsibility for the attack.
"Iraqi civilians are paying the price for the political instability in the country," Khodr said.
"The day the election results were announced there were twin bombings in Khalis, killing almost 50 people.
"Violence has been on the rise here since the elections. Iraqis do not have much hope of a resolution.
"We need the supreme court to certify the results of the election, at least then the parliament can meet," she said.
Tensions have been running high since an inconclusive March 7 parliamentary election left a power vacuum and raised concerns about a renewal of sectarian violence.
The election has yet to be certified and talks to form a new government could take weeks.
Attacks have killed hundreds of people in recent weeks. Another car bombing on Friday in the town of Nimrud, just south of the northern city of Mosul, wounded seven people, police said.