After setting off an explosion around 6:00 am at a single-family home, the man fled into his nearby apartment wearing camouflage and a gas mask. From there he called police and threatened further explosions. Officers in the Hessian town of Viernheim have secured the area around the building.
The family sustained minor injuries when the parents were forced to break a window and escape with their seven and nine-year-old children, both of whom suffered from shock after the blast, police said.
Investigators believe that another early-morning explosion in Weinheim, some five kilometres away in Baden-Württemberg, may have also been set off by the man. According to a police spokesperson, the blast involved a hand grenade, though no one was injured.
While his motive remains unclear, news agency DDP reported that the man was being evicted by his landlord after failing to pay rent for several months.
Meanwhile one of the man's neighbours told reporters that the man had been experimenting with explosives in his parents' garden for years and often wore military clothing.
Police assume the man is armed, but does not have any hostages. They remain in telephone contact and special commandos have gained access to the building.