The sources said authorities were following a lead to an apartment thought to house eight suspected members of Hasm, a group which has claimed several attacks around the capital targeting judges and policemen since previous year. A fake claim in the name of the small extremist group Hasm, reported by multiple local media, spread on social media soon after the attack.
Terrorist attacks, mainly targeting police and military, increased after the ouster of former Islamist president Mohamed Morsi in 2013 by military following massive protests against his rule.
Militant group Hasm is said to have links with the Islamic State. He also commanded the armed forces and police for saving Egypt over the past years from meeting the same fate of countries plagued with terrorism, the presidency statement said.
Two truck drivers heading away from the scene told AFP they had seen heavy deployments of security personnel in the area and that aircraft were carrying out surveillance.
The number of dead was expected to rise, the sources said.
The statement said that the forces were looking for terrorists in the surrounding areas. Cairo has struggled to contain an insurgency since its military led a coup against Egypt's first democratically-elected leader. The Muslim Brotherhood denies this.
In their statements, none of the militant groups claim any affiliation to the Muslim Brotherhood.
The military has launched security campaigns in Egypts restive North Sinai province, arrested suspects and demolished houses that belong to terrorists, including those facilitating tunnels leading to the Gaza Strip.
IS has maintained a steady war of attrition with sniper attacks and roadside bombings.