Eyewitnesses said the balloon looked like a tower of flames as it crashed.
Two of those killed jumped out of the basket in desperation before the fiery balloon hit the ground with a loud bang. It crashed into farmland near the township of Carterton, a region well known for its hot air ballooning.
The pilot and five couples were killed. The early morning weather was clear and bright with minimal wind.
Superintendent Mike Rusbatch said it appeared the balloon's basket struck power lines that ignited a fire on board. Witnesses told local media they saw 32-foot-high flames rising from the basket.
The only victim publicly identified so far is the pilot and balloon owner, Lance Hopping. He was the safety officer for the Balloons over Wairarapa annual event and was considered an experienced and safety-conscious pilot.
The incident is being called New Zealand's deadliest air accident in nearly 50 years. In 1963, a DC-3 airliner crashed in the Kaimai Range, killing all 23 passengers and crew aboard, according to the New Zealand Ministry for Culture and Heritage.
Also in 1979, an Air New Zealand DC-10 airliner on a scenic flight slammed into Mount Erebus in Antarctica, killing all 257 people on board.
The Associated Press contributed to this report.