Officers also found another body at the same address, police said.
Police gave no details about the suspect but said "there are currently no indications of further perpetrators." They didn't specify why they believe "with a high degree of probability" that he was the assailant.
The number of dead in Wednesday evening rose to nine, a police statement said.
According to the Reuters news agency, the daily Bild newspaper reported that the gunman left a letter and video behind in which he confessed and expressed extreme right-wing views. The paper didn't cite a source. Police couldn't be reached for comment on the report.
Officers sealed off and searched an apartment in Hanau's Kesselstadt district, near the scene of one of the shootings, after following up witness statements on a getaway car.
"Thoughts this morning are with the people of Hanau, in whose midst this terrible crime was committed," German Chancellor Angela Merkel's spokesman said on Twitter.
"Deep sympathy for the affected families, who are grieving for their dead," the spokesman, Steffen Seibert, said. "We hope with those wounded that they will soon recover."
Earlier Thursday, police said eight people had been killed and about five wounded. They said a dark vehicle was seen leaving the location of the first attack and another shooting was reported at a scene about a mile-and-a-half away.
Police swarmed central Hanau and cordoned off the area of one of the shootings as a helicopter hovered overhead. A car covered in thermal foil also could be seen, with shattered glass next to it. Forensic experts in white overalls collected evidence.
Hookah lounges are places where people gather to smoke flavored tobacco from Middle Eastern water pipes.
"This was a terrible evening that will certainly occupy us for a long, long time and we will remember with sadness," Hanau Mayor Claus Kaminsky told the Bild. Lawmaker Katja Leikert, a member of Merkel's center-right party who represents Hanau in the German parliament, tweeted that it was "a real horror scenario for us all."
Hanau is about 12 miles east of Frankfurt and has a population of approximately 100,000.
Source: CBS News and AP