Crews from Fire and Rescue NSW arrived at the Condell Park home about 4.30am after reports the master bedroom on the home's first floor had caved in.
The room collapsed into the four-car garage below, destroying two cars, and damaging another two, Nine News reports.
Fire and Rescue NSW Superintendent Adam Dewberry said the family inside had managed to escape without injury, and crews established an exclusion zone around the house.
"Because of the amount of damage, there was nothing that we could really do," Supt Dewberry said.
NSW Better Regulation and Fair Trading Minister Anoulack Chanthivong said the collapse was being investigated by first responders and the department.
"This is a shocking incident, we are grateful no one was seriously harmed and that the family have been able to find temporary accommodation," Mr Chanthivong told AAP.
"Authorities are investigating now so it's too early to tell what has happened and I won't preempt their findings.
"Once it's clear what has happened to this family, I'll work with the department and commissioner to ensure appropriate action is taken."
It was unlikely Fire and Rescue NSW crews would be able to stabilise the building, due to the extensive damage, Supt Dewberry said.
"There's going to have to be significant recovery and make safe work done. The advice is for people to stay out until it can be safely stabilised."
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