Barratt Developments. proposed £2.5 billion merger with rival housebuilder Redrow is facing an official competition inquiry after the regulator the CMA widened its initial probe.
Inviting comments from interested parties, the CMA said it would consider whether the deal announced in February would hurt competition.
Combined the two firms would build about 23,000 homes a year and make more than £7bn in revenue.
Barratt said: “We are confident that the combination of Barratt and Redrow is in the best interests of customers and will accelerate the delivery of the homes this country needs.
“We look forward to working constructively with the CMA as they undertake their review.”
The watchdog said it will report its findings by August 8.
Consolidation among the UK’s housebuilders is accelerating with Crest Nicholson revealing today it had rejected several merger offers from peer Bellway, with the last valuing it at £650 million.
Separately, housebuilders have dismissed the two manifestos from the leading parties in the election run-up as containing nothing to boost the sector.
Labour Party confirmed plans to build 1.5 million new homes, with the Tories promising 1.6 million homes.
"The land supply side is very constrained and regardless of which party wins the election, this will not change quickly," Crest Nicholson's exiting chief executive Peter Truscott told analysts yesterday.
"The planning system operates at a snail's pace," he added.
"Labour would address the planning system more aggressively, including a more strategic approach to the green belt and also a seemingly greater focus on social and affordable housing provision," said Aynsley Lammin, housing analyst at Investec.