Three American students have been shot to death at a residential complex of the University of North Carolina at Chapel Hill and a suspect has been arrested over the incident, according to local police.

Chapel Hill police told local news outlets that Craig Stephen Hicks, 46, was arrested and charged with killing the three Muslim students.

Hicks made a brief court appearance on Wednesday morning, saying he understood the charges, according to the Associated Press. His probable cause hearing was set for March 4 and he is being held without bond.

In a statement posted online, Chapel Hill police said that "preliminary investigation indicates that the crime was motivated by an ongoing neighbour dispute over parking."

"We understand the concerns about the possibility that this was hate-motivated and we will exhaust every lead to determine if that is the case," the statement said quoting Police Chief Chris Blue.

Hicks turned himself in after the shooting on Tuesday in Chapel Hill, just outside the campus of the University of North Carolina, AFP news agency reported.

Police officers responded to a report of shooting at around 5:15pm on Tuesday, and found three people who were pronounced dead at the scene.

The police website released a statement confirming the three deaths and saying the department is "questioning a person of interest in the crime and has reason to believe that there is no ongoing threat to the public".

'Hateful' neighbour

The victims were identified as 23-year-old Deah Shaddy Barakat, his 21-year-old wife, Yusor Mohammad, and her sister, 19-year-old Razan Mohammad Abu-Salha, police said.

A local TV station in North Carolina quoted the father of the slain women, Mohammed Abu-Salha, as saying that his daughter had told him several times that they had a neighbour who was "hateful". His daughter also reported that the man had a gun in his waistband more than once.

"They lived a clean life, never gave us a bad day," Abu-Salha was quoted as saying. "We raised them in our faith. We raised them to love their country and their people, and everybody’s heart is broken. Everybody. All walks of life. The whole city did not sleep last night."

Read more: Chapel Hill shooting and Western media bigotry

"I'm kind of in shock. I'm really confused and I have been since 5:30," said Kristen Boling, who lived in the complex where the shooting occurred.

The university said that Barakat was a second-year student at its dentistry school, his wife was planning on starting there in autumn, while her sister was a student at North Carolina State University.

Whatever emerges from the #ChapelHillShooting, pray for the families of Deah Barakat and Yusor and Razan Abu-Salha. pic.twitter.com/BMn9kwOpks — Joe Catron (@jncatron) February 11, 2015

Residents told local media that the complex was a peaceful place.

"It's a very quiet community," Bethany Boring, who lives in the complex, told television station WRAL.

"It's a lot of graduate and professional students. You know, professionals' families."

Friends and family and the online community shared photos of the victims via social media after the incident.

The hashtag #ChapelHillShooting went viral after the incident was reported, many of the tweets criticising the US and other Western media for not covering the shooting.