Many trees were also uprooted after huge trunks crashed into Thunag Bazaar.
Heavy rain triggered landslides and flash floods in various districts of Himachal Pradesh, causing widespread damage across the state.
The weather office has issued a red alert for about 10 districts of Himachal Pradesh, warning of extremely heavy rain over the next couple of days.
A new video has now surfaced online that shows rainwater rushing down from the hills onto the road In Mandi's Thunag Bazaar.
Huge tree logs, which were carried along the muddy water, damaged several houses and shops at Thunag Bazaar in Onair village of Mandi district.
The video capturing the alarming scene at Thunag Bazaar has gone viral. Officials said the flash floods were triggered by a cloudburst in the region amid intense rain.
Many trees were also uprooted after huge trunks crashed into the village. The stretch has been closed and work is on to clear the debris, officials said.
Chief Minister Sukhwinder Singh Sukhu has appealed to people to stay indoors for the next 24 hours.
The Chief Minister requested legislators to camp in their constituencies and help out the public. "Please help people during this calamity and ensure that they are compensated for their losses," he said.
The weather office said an interaction between a western disturbance and monsoonal winds is leading to an intense rainfall spell over northwest India.