The cordons were lifted before 3pm.
At edition time on Tuesday police were still trying to locate the offender.
It is understood a live round was found in the unit where the shooting reportedly took place.
With the country's borders closed some hostels are renting out rooms as temporary accommodation.
The Paihia incident follows a number of firearm-related crimes around Northland in recent weeks.
Last week Tuesday the armed offenders squad was deployed on Horeke Rd in South Hokianga after gunshots were reported and a man threatened to shoot a family and burn down their home.
The alleged offender in the Horeke incident has since been arrested.
One day earlier two men were found shot dead at a farm in Awarua, south of Kaikohe.
Police are not looking for anyone else in relation to the deaths.
