A suspected stolen car crashed into two houses moments after police started to follow it.
Two men in the black Mercedes were injured when the car smashed into homes on Ayresome Green Lane in Middlesbrough at about 01:20 BST.
Cleveland Police said a patrol vehicle spotted the car and switched on its lights and sirens "very briefly" before the crash.
Two men, aged 29 and 26, have been arrested. No-one else was hurt.
A police spokeswoman said the men in the car were cut out by firefighters, taken to hospital but later released.
The spokeswoman said senior officers were investigating the build-up to the crash and it has been referred to the Independent Police Complaints Commission (IPCC).
Frank Sayers lives in one house while his daughter Claire lives next door.
She said they were in "utter shock".
She told BBC Tees: "You just don't expect it to happen.
"My mum and dad were trapped in their house, we had to break the door down to get them out."
Mr Sayers said he and his wife were asleep upstairs when the car crashed.