US officials have confirmed the raid on the residential house in Baiji, 200 kilometres north of Baghdad.
The US military reported an unmanned drone spotted three men planting a roadside bomb, who all later fled into the house.
In a statement he read to AFP, US military spokesman Lieutenant-Colonel Barry Johnson said "the individuals were assessed as posing a threat to Iraq civilians and coalition forces, and the location of the three men was relayed to close air support pilots."
“Coalition forces employed precision-guided munitions on the structure," he said.
Relative heard bombing
Ghadban Nahd Hassan, 56, lost family members in the attack and said 14 people were in the house when it was bombed
"I was with some friends in a small shop 100 metres away from the house when I heard the bombing at around 9:30 pm," Mr Hassan told AFP.
He said he rushed over to find his house destroyed.
Mr Hassan said rescue workers recovered the bodies of a nine-year-old boy, an 11-year-old girl, three women and three men from the debris.
Another two women and an eight-year-old boy were badly injured while three more people were still missing late Tuesday afternoon.
Mr Hassan said he doesn’t why his home in an industrial part of the usually quiet town of Baiji was bombed.
Hamad Hamud al-Qaisi, the governor of Salaheddin province, demanded an official investigation into the attack.