The graffiti included messages such as "death to Arabs" and "go away," Ynetnews reported Thursday.
The youths told police someone broke into their apartment Saturday night and spray-painted the messages.
The Arab youths had "never harmed anyone, nor endangered the well-being of 'Zionists' or anyone else," Barack Cohen, an attorney and social activist, wrote on a Facebook page.
"They live in harmony with their neighbors," Cohen added. "Their house was broken into, racist graffiti was sprayed -- the only thing they left untouched was the mezuzah."