Signed purchase agreement on new construction and basement flooded before closing

[Lunceford La]

We signed a purchase agreement in constructing a semi-custom house and are expected to close somewhere mid February. The home is almost 80% completed, and due to the downpour these days, we went to check out our walk-up basement last night and found that the basement was flooded about 2 inches. The plumber came out immediately but so far we are not clear what caused the flood. The developer thinks several factors contributed to it: i) the grading hasn't been done, and there is a slope that directs water into the home; ii) the downspout hasn't been done. We are not sure if risks are removed if these two are completed. They ordered new drywall and plan to replace them. The HVAC is in the basement so not sure what's the effect on that. The sump pump was working hard at the time and made very loud noise (that we could hear when we are on the second floor), but obviously didn't help much.

Anyone can advice what are the options at this point? I am heasitant whether we should proceed with purchasing this home. On one hand, we have been very excited with this new property. On the other hand, basement flooding is one of our worst night mare. We even had several discussions with the builder prior to our purchase how this could be avoided. Do we have the option to walk away or renegotiate the final price? or should we just proceed pretending nothing had happened and hoping this never happens again? If we are to walk away, what actions should we take?