A group of 20-30 apparently drunken onlookers applauded as fire took hold in a former hotel being converted into home for asylum seekers, in a suspected arson attack in the town of Bautzen in Saxony state overnight.
Some members of the group also tried to impede the work of firefighters dispatched to the scene, police said.
A police spokesman said that the group showed “unabashed delight” at the blaze and made “disparaging comments” about the efforts to contain it.
No one was hurt.
The events came two nights after about 100 angry people in the Saxony town of Clausnitz tried to block the arrival of a bus carrying about 20 asylum seekers to a new shelter.
The scenes, captured on video, show the mob angrily shouting “We are the people”, borrowing the pro-democracy slogan from the peaceful revolution that led to the fall of the Berlin Wall in 1989.
The images, which have gone viral on social media, show police officers dragging terrified refugees out of the coach, including a teenage boy reportedly from Lebanon.
Political officials expressed outrage at the incidents.
“Racists are pathetic lawbreakers, a disgrace for our country. Shame on you!” deputy foreign minister Michael Roth wrote on Twitter.
“Those who shamelessly applaud when houses burn and scare refugees to death are displaying disgusting and revolting behaviour,” Justice Minister Heiko Maas tweeted.
Maas told media group RedaktionsNetzwerk Deutschland he was stunned by the growing brazenness of far-right groups, which he said crossed the line of free expression to become a threat to public safety.
“Verbal radicalism is a prelude to physical violence,” he said, noting there were more than 1,000 criminal acts against refugee shelters recorded in Germany last year, when the country let in nearly 1.1 million asylum seekers.
Saxony registered the highest number of attacks.
Interior Minister Thomas de Maiziere said it was “totally unacceptable that people who are seeking protection from oppression are met with hatred and incitement”.
“There is a basic level of decency and respect for the law that may not be violated and in these incidents in Saxony, that level was clearly violated,” he said, according to DPA news agency.
Aydan Ozoguz, who handles integration issues for the government, condemned the actions of the police in Clausnitz, calling it “deeply shocking” that the authorities were “not protecting the refugees”.
She also blasted the “deplorable” scenes in Bautzen. “I am horrified that you again have scenes in Germany in which a mob applauds because a refugee shelter is burning,” she said.
“Something is going very wrong in Saxony.”
Around 100 people held a “solidarity rally” for refugees in Clausnitz late on Saturday, carrying signs calling for safe and humane living conditions for the asylum seekers, DPA reported.