To my knowledge, this isn’t a bug. It’s an (Unimplemented?) Feature… …I think.
It generated after the basements did, and generated over the house. It happens from time to time. It can also happen with slime pits, ant-hills, Labs, and anything else that generates sprawling compounds/areas under something that can normally generate a single tile basement.
Well after losing several characters to bad early playstyle and generating a lot of new worlds, all the basements are normal so I assume this is a freak incident.