Firefighters and rescuers picked through still smouldering rubble and twisted metal, an AFP correspondent saw, while first responders extinguished burning cars following the strike.

The attack appeared to have damaged properties and vehicles with a major security deployment at the scene.

The Iran-backed militant group said in a statement that its fighters targeted Nahariya "with a barrage of rockets and a swarm of attack drones".

Israel's Magen David Adom (MDA) emergency responders said that paramedics in the area were treating a man "in mild to moderate condition suffering from blast injuries".

The blast was from "a missile strike between two buildings that caused a large fire", MDA paramedic Yonatan Avilea said.

The emergency service added that paramedics were also providing treatment to six people -- two teenage girls and four adults -- suffering from smoke inhalation.

Military sources quoted by Israel's public broadcaster KAN said that the impact was caused by a rocket and not an Israeli interceptor, denying previous reports in the media.

"You can see here in these homes that there were families who followed the instructions and stayed in protected spaces. Because they were in protected spaces, lives were saved, and these families are alive," said the Commander of the Home Front Command, Shai Klapper, at the scene.

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