It is likely that the Builder thought about the contingency that the property might not appraise out, but that you did not. If the property does not appraise out, your choices are to come up with more personal funds for the purchase or to negotiate a price closer to the appraisal price. Walking away from the contract might well buy you a lawsuit.
Make sure you know your rights and liabilities
Don't leave it to your real estate agent or your banker to negotiate this matter for you. Their interests are going to be in conflict with your own. The real estate agent is not going to want a change in the price, because that might change their commission. The banker is going to want to protect his bank from liability. It is a good idea to hire an attorney, who will only have your interests in negotiating and advising you.