The coalition said in a statement that it had no operations at the location and “other causes” for the incident must be considered.
It said the alliance “has in the past avoided such gatherings and (they) have never been a subject of targeting.”
“The toll is very high: more than 520 wounded and more than 100 martyrs,” health ministry spokesman Tamim al-Shami told rebel television channel Almasirah.
He said the toll was likely to rise further as there were “charred human remains” that have yet to be identified and many people unaccounted for following the strikes on a building where mourners had gathered in southern Sanaa.
There was no independent confirmation of the toll.
Senior health ministry official Nasser al-Argaly earlier gave a toll of 82 killed and 534 wounded.
Witnesses said hundreds of people were attending the funeral of the father of a rebel interior minister Jalal al-Rowaishan when the building was hit.
The Houthis did not say if Rowaishan was present in the building at the time of the attack which they dubbed a “massacre” nor did they indicate if other senior figures were attending the funeral.
The Iran-backed Houthis swept into Sanaa in September 2014 and advanced across much of Yemen, forcing the internationally recognised government of President Abd-Rabbu Mansour Hadi to flee the capital.
The insurgent-controlled news site sabanews.net said that coalition planes hit a building in southern Sanaa where hundreds had gathered to mourn the death of the father of a prominent local official.
The Houthis did not say if the official – rebel interior minister Jalal al-Rowaishan – was present in the building at the time of the attack which they dubbed a “massacre” nor did they indicate if other senior figures were attending the funeral.
Rebel Almasirah television said Sanaa mayor Abdel Qader Hilal was among those killed.
People had come from all over Sanaa to attend the funeral, said Mulatif al-Mojani, who witnessed the air strikes.
“A plane fired a missile and minutes later another plane pounded” the building, he said.
A security source, quoted by the rebel website, said a fire tore through the building after the strikes.
The coalition has told AFP it uses highly accurate laser- and GPS-guided weapons and verifies targets many times to avoid civilian casualties.
At dawn a suspected Saudi-led raid on a house near Bajil, in the Red Sea province of Hodeida, killed four civilian members of the same family, a local official said.