"The Khan Yunis massacre... Of children is a horrendous war crime, and all Israelis have now become legitimate targets for the resistance," Hamas spokesman Sami Abu Zuhri said in a statement, without elaborating.
Medics said another 25 people were wounded in the strike.
Witnesses said a drone launched a warning flare, prompting relatives and neighbours to gather at the house as a human shield, but shortly afterwards an F-16 fired a missile which levelled the building.