"US security cooperation with Saudi Arabia is not a blank check," US National Security Council Spokesman Ned Price said in a statement.
"Even as we assist Saudi Arabia regarding the defense of their territorial integrity, we have and will continue to express our serious concerns about the conflict in Yemen and how it has been waged."
Price added that the US would reevaluate its support for the coalition in its fight to prevent Houthi rebels
allied with Iran and forces loyal to Yemen's deposed President Ali Abdullah Saleh from taking power.
"In light of this and other recent incidents, we have initiated an immediate review of our already significantly reduced support to the Saudi-led coalition and are prepared to adjust our support so as to better align with US principles, values and interests, including achieving an immediate and durable end to Yemen's tragic conflict," he said.
Earlier Saturday, the Saudi-led coalition denied accusations that it was responsible for the attack.
It later said it will "immediately investigate" reports that its warplanes were responsible for the airstrikes, according to the official Saudi Press Agency.
"The coalition confirms that its troops have clear instructions not to target populated areas and to avoid civilians," SPA added.
'Too heavy a price'
Witnesses of Saturday's airstrike in Sanaa reported multiple civilian casualties at the wake, where hundreds of people had gathered to mourn the death of rebel-appointed Interior Minister Jalal al Rowaishan's father.
In addition to the reported deaths, hundreds of attendees were also wounded in the strike, local health officials said.
At least 20 people lost limbs, according to medical staff at the German Hospital in Sanaa.
Robert Mardini, regional director for the International Committee of the Red Cross, condemned what he called an "outrageous loss of civilian life."
"Civilians in Yemen have already paid far too heavy a price these past 18 months," he said in a statement.
The Saudi-led coalition, involving several Arab countries,
began a military campaign in Yemen in March 2015 after Houthis -- a minority Shia group supported by Iran -- drove out the US-backed government, led by President Abdu Rabbu Mansour Hadi, and took over Sanaa.
The crisis quickly escalated into a multisided war,
which allowed al Qaeda and ISIS -- other enemies of the Houthis -- to grow stronger amid the chaos.
Since peace talks in Kuwait failed in August, the coalition has intensified airstrikes, despite vocal criticism from rights groups that the bombardments have been indiscriminate and could constitute war crimes. The attacks have often hit civilian targets with devastating results.
The US has come under increasing pressure to stop selling arms to Saudi Arabia.
The US Senate last month rejected a bipartisan proposal to block a pending $1.15 billion United States arms sale
Critics of the military deal, which was approved by the Obama administration, complained it could further drag the US into the war in Yemen and contribute to the worsening humanitarian crisis there.
Civilian casualties are only part of the crisis. Yemen's UNICEF office has reported that nearly 10,000 children younger than 5 died from preventable diseases there during the past year.
Some 1.5 million children are currently malnourished in Yemen, and 370,000 of them suffer from severe acute malnutrition, according to the charity.
Yemen's economic infrastructure has also been ravaged by war.
At least 430 factories and companies were destroyed by coalition airstrikes since the start of the conflict, according to Ahmed Bahri, political chief of the Sanaa-based Haq Party.