Builder buying down a loan vs reducing home price

[Jack Black]

I'm confused by the last sentence of this example in my real estate course.  "A builder would rather make an additional cash payment to the lender than reduce the price on a home in a new development."

Why would the builder in this example have to lower the price?  The two situations seem independent to me.

Thanks in advance!

A builder agrees to buy down the interest rate for the first three years of a mortgage in a new subdivision. The borrower will pay 2% interest on the mortgage for the first year, 3% the second year, and 4% for the remaining years of the mortgage. The difference in the monthly payment in years 1 and 2 is made up by the buydown cash payment the builder gives the lender. If mortgage amount were $100,000 and the loan term 30 years, for the first year at 2%, the borrower's monthly principal and interest (PI) is $369.62. In the second year, at 3%, the borrower's monthly PI is $421.60. In years 3–30, the borrower's monthly PI is $477.42.

$477.42 – $369.62 = $107.80 (monthly differential year 1) × 12 monthly payments = $1,293.60

$477.42 – $421.60 = $55.82 (monthly differential year 2) × 12 months = $669.84

$1293.60 + $669.84 = $1,963.44 amount of buydown

Each month the lender goes into the "buydown account" and takes out the amount necessary for the full monthly payment of 4%. A builder would rather make an additional cash payment to the lender than reduce the price on a home in a new development.