Some add'l info: the contract does not explicitly detail ceilings except that "specs and allowance same as house X" in same neighborhood. This house had bullnose corners with knockdown walls and ceilings and we talked a week ago when we finally made the decision to go with the bullnose corners but everything was to be smooth.

He has verbally mentioned that specs will be the same as all his houses in this neighborhood. We have a detailed description list of house Y from when we were doing GC interviews and house Y states smooth ceilings. Smooth is our first choice, knockdown is second but definitely not the slap brush!

Smooth finishes are more pricy as they are more labor intensive with multiple coats of the seams ,typically four, follwed by a skim coat of the entire surface, level 5. It could also be that the finishers your builder uses aren't familair or capable of smoothe wall/ceiling finishes. Not many are, imo, and you're not going to get the same results form drywall that you would a blueboard, skim plaster finish. Sanding down the slap isn't going to give you the same texture as a knockdown although you could have them do an area and see if you care for it. Otherwise it's a matter of sanding down and skim coating the area that has been done to try and achieve a decent smooth finish. Whatever is specified in your contract, otherwise it would be a change order, all in writing.

As stated above, the contract specifies the same specs as house X and house X as knockdown which we are fine with. Slap brush (stipple) was never mentioned or anything until it showed up on our ceilings. I realize that sanded down slap brush is not knockdown, but sanding it down to "prep" for knockdown would be less labor intensive than prepping for smooth.
The builder offered to do the unfinished portion of the ceilings smooth, but that is not the issue. The issue is the ceilings with slap brush texture instead of smooth or knockdown. There's going to be a lot of sanding going on.

If there are other homes that have slap and some with knockdown with multiple homes going up in the area, it sounds like typical communication breakdown between builder and subs which is their problem to correct at their expense. Get it how you want it as specified. Hope it all works out well for you!

I spoke with the builder just a little while ago. He said they could sand down all slap brush and do knockdown on the main floor (all the common areas and master) and just leave the slap on the upstairs (just bedrooms and baths) and garage. He is doing the dining room smooth since the area between the coffered beams will be painted. I told him that would be fine. What a relief!

As long as you are happy with the outcome, that's all that matters. Glad to hear it all worked out!