UPDATE 9AM: A man will appear in court today charged with firearm offences after a shot was allegedly fired into a house at South Grafton.
The 23-year-old man was charged with fire firearm at dwelling house with disregard for safety and possess loaded firearm in a public place. He was refused bail to appear in Grafton Local Court today.
A 42-year-old woman, who was also arrested during the investigation into the shooting, was released pending further inquiries.
UPDATE: Neighbours said there have been some wild scenes, including a naked man in handcuffs on the front lawn at a house where two men were arrested in South Grafton this morning.
"A few weeks ago there was a fight going on over there and I came out to see what was going on," said one neighbour.
"There was this one guy fully naked in handcuffs waiting for the police to take him away." "Everyone was off their heads."
Another neighbour said cars are always spinning their wheels and driving fast around the corner.
"I don't know what's going on over there," she said. "There's always cars pulling up, they get out for while and come back. Then they're driving off fast, spinning their wheels."
The neighbours have also noted a the number of used cars regularly outside the premises.
"They're always getting cars in, ripping parts off them and then putting them out on the street for sale for a few hundred to a thousand dollars," he said.
UPDATE 11.15am: Police are searching a house and a car in Cowan St, South Grafton, where they believe a weapon used to fire a shot at another South Grafton residence this morning is located.
Acting Coffs Clarence Police Area Commander Superintendent Peter McKenna said the men had been arrested after a search warrant was issued to enter the house.
Detectives brought out some items from the house, but nothing that looked like a weapon.
A witness who lives next door to the house where the shot was fired, said he was woken by a disturbance about 6am.
"I could hear a woman sort of pleading," he said. "I didn't hear a shot, but she was saying 'don't do it, don't do it.'.
"There's always stuff happening there."
Police said no-one was injured in the incident.
EARLIER: POLICE have arrested two men after a shot was fired in South Grafton this morning.
The shot was fired about 6am into the wall of a house in Through St.
After 9am police arrested two men at an address in Cowan St.
Police said the occupants of the house and neighbours have been helping them with inquiries.
Superintendent Peter McKenna is on his way from Coffs Harbour to take charge of the operation.