Builder framed for 8ft ceilings instead of 9ft. Is it fixable?

I am in the final couple months of the building process of my new house. My builder called and said the drywall was recently finished, so I went to the site and checked it out. There is a vaulted ceiling in the family room, and then all other ceilings were supposed to be 9ft (agreed upon and paid for as an upgrade in the signed builder's agreement contract). However, when I went in, I noticed that the ceilings were just barely 8ft.

Is there any hope of saving it? As mentioned, everything is already done with the drywall/insulation/etc. I fear that this is going to completely derail the whole process. I talked to the builder yesterday morning to tell him about the mistake, and haven't heard back since. I'm assuming he is having a freak out and trying to determine what to do next.

First Update: Just talked to builder. He tried blaming it on us working with a real estate agent during the planning process. He made it seem like he wasn't involved in the blueprints, but that just isn't true at all. He was there for every major meeting. I have signed contracts explicitly showing exactly how the house was to be built.

He obviously said it isn't able to be fixed and tried to just offer the refund of the upgrade amount ($3k) and thought I would roll over. I told him that isn't going to happen and I would get back to him with what I want to do. Seems like I will be finding an attorney.

Second Update: My agent that helped me with the buying process talked to the builder. He was not interested in taking blame. He said "If they don't want it, I'll use it as a model home and give them their money back, I don't really care". Currently in the process of finding a lawyer.

Third Update: I talked to the builder myself. We cleared the air and he admitted there was a mistake with whoever put his blueprints together. The plan said 9ft but the blueprint showed 8ft. He built what he saw, but said he should have double checked. We are in the process of figuring out how to transfer everything loan-wise so we can start over on a new lot. He said he will sell the current build and funnel any profits back to us.