In Psalm 118:22 (KJV) we read:
The stone which the builders refused is become the head stone of the corner.
As I understand, the "stone" is Jesus Christ and the builders' refusal refers broadly to Jesus' persecution in the New Testament.
But who were the builders and why did the Psalmist call them "builders?"
“Builders” are the Jews, the chosen nation, who has a special relation with Lord and expects Messiah, the Redeemer. The act of “building” stands for Jews trying to please God by their deeds.
However, they could not understand and even many of them, even sensing that Jesus was Christ, on purpose did not will to understand God’s will through Holy Spirit (cf. John 12:43), for which reason they expected the Messiah in political terms as the liberator from the political oppression.
That’s why when the Lord Jesus Christ announced Himself the promised Messiah, yet clearly made them known that He held no political agendum of restoring a political Jewish kingdom, but spoke of the “Kingdom not from this world” (John 18:36), they rejected Him as somebody utterly at odds with their expectations and desires.
For this reason Paul also says that Jews do have religious zeal, yet not according to understanding in Holy Spirit (Romans 10:2), and that’s why they establish their own righteousness instead of God’s righteousness (Ibid. 10:3), rejecting the “Stone” which started to be worshipped by all the nations of the world (cf. Matthew 12:21).
The idea that the "stone" in Ps. 118 is Christ implies that the "builders" are God's people, the Jews, who laid the providential basis for the coming of the Messiah but did not accept him. They are called "builders" because they established a covenant with God, received and upheld God's Law, established the messianic lineage of David and protected it for many generations, fought God's wars, suffered exile for their sins but returned in faith, rebuilt God's Temple, and received the prophets who predicted the Messiah's coming.
But if one examines the intent of the Jewish author of this psalm there are other, perhaps better, explanations.
If the Psalm is post-exilic, as some commentators believe, then the builders analogy is a reference to the the position of Israel among the gentile nations who previously enslaved Israel and destroyed the temple. The psalmist speaks of the king, and by extension the nation, as finally victorious after a difficult struggle:
All the nations surrounded me, but in the name of the Lord I cut them down. They surrounded me on every side, but in the name of the Lord I cut them down... Shouts of joy and victory resound in the tents of the righteous.
In post-exilic context this could refer to the Maccabean rulers who overthrew Greek rule and also conquered several other neighboring nations. Or it could refer to an earlier generation, just after the completion of the Second Temple. In either case "the builders" refers to Israel's leaders and the stone refers to its core, which was rejected because of its corruption but is now restored to godliness. The Expositors Bible Commentary states:
They [the priestly chorus] set forth the great truth made manifest by restored Israel’s presence in the rebuilt Temple. The metaphor is suggested by the incidents connected with the rebuilding. The "stone" is obviously Israel, weak, contemptible, but now once more laid as the very foundation stone of God’s house in the world... There had been abundant faintheartedness among even the restored exiles. The nations around had scoffed at these "feeble Jews," and the scoffs had not been without echoes in Israel itself. Chiefly, the men of position and influence, who ought to have strengthened drooping courage, had been infected with the tendency to rate low the nation’s power, and to think that their enterprise was destined to disaster. But now the Temple is built, and the worshippers stand in it.
This explanation puts the psalm in historical context and is particularly consistent with its tone of joyous thanksgiving and praise after the king's victorious battles. The builders rejected the "stone" which had become corrupt by worshiping foreign gods and failing to uphold the teaching of the prophets. The nation was enslaved by the Babylonians and a result, but now the temple is rebuilt and those who conquered Israel are defeated. The psalmist concludes with an invitation to celebrate within the rebuilt Temple.
The Lord is God, and he has made his light shine on us. With boughs in hand, join in the festal procession up to the horns of the altar. You are my God, and I will praise you; you are my God, and I will exalt you. Give thanks to the Lord, for he is good; his love endures forever.
So, while the traditional Christian explanation is correct that the builders are Israel, the stone may be best understood as its weak core which had finally been restored after the rebuilding of the Temple. Placing the verse in context, both historically and within the poem, enables us to better discern the meaning of the entire psalm.
There are no "builders" as this is a word picture referring to an ancient building technique1:
The idea is that when a house is built, the builders examine each stone for suitability, and the unsuitable stones are thrown away. So the Psalm is referencing this technique by saying "YHWH will take the stone that has been discarded and make it a cornestone for his house" (as suggested by verse 19)
Thus asking "who are the builders?" is a like responding to "a bird in the hand is better than two in the bush" by asking "which bush?"
However we can try to read more meaning into this verse by looking at the context. Supposedly the stone is viewed as flawed by someone examining it, who rejects it. Let's look at the rest of the Psalm
v 6-7
The LORD is on my side; I will not fear: What can man do unto me? The LORD taketh my part with them that help me: Therefore shall I see my desire upon them that hate me. (KJV)
This is similar to the statement that "what man rejects, God accepts"
Then we have verse 8:
It is better to trust in the LORD Than to put confidence in man.
Aha! A theme is developing..
verse 9:
It is better to trust in the LORD Than to put confidence in princes.
So we are certain of the theme, which is common in Psalms, that God is the salvation of those who trust in him. It is this concept of deliverance that is illustrated by God taking the rejected stone and putting it in a position of pre-eminence, however more than just deliverance is meant. The fact that the stone was rejected points to a spiritual principle, e.g. just as the waste of the animal kingdom is the food of the plant kingdom and vice versa, the rejected ones of the kingdom of men are the important ones in God's kingdom. See, e.g. 1 Cor 4.13 has "...we are made as the filth of the world, and are the offscouring of all things unto this day." So both concepts are present in this verse.
But like all the other Psalms, the whole point is for the reader to trust in God for deliverance from whatever enemies they happen to be facing. Psalms are homiletic works intended for application by the worshipper.
It is in this sense that Jesus applies Psalm 118 to the husbandmen in charge of the vineyard in Matthew 21:42-45. It was understood that the vineyard was a type for Israel, and the husbandmen would be the religious leadership of Israel -- not "jews", which were the vineyard, but the husbandmen tending the vineyard:
Matthew 21:45 (KJV)
45 And when the chief priests and Pharisees had heard his parables, they perceived that he spake of them.
However Jesus didn't just apply this verse to point out that God would deliver him from the hands of the religious leaders - that was just a secondary point. Jesus went on to threaten the leaders:
Matthew 21:44 (KJV 1900)
44 And whosoever shall fall on this stone shall be broken: but on whomsoever it shall fall, it will grind him to powder.
So the choice is to be broken or to be utterly destroyed. If you were broken then you would be the offscouring of the world and rejected, making you suitable for God's kingdom. Otherwise you would be destroyed. There is no more choice to go on as you did before. That is, it would no longer be possible to reject the stone and have God take it away. How could a cornerstone crush someone? By filling the whole earth:
Daniel 2:34–35 (KJV 1900)
34 Thou sawest till that a stone was cut out without hands, which smote the image upon his feet that were of iron and clay, and brake them to pieces. 35 Then was the iron, the clay, the brass, the silver, and the gold, broken to pieces together, and became like the chaff of the summer threshing floors; and the wind carried them away, that no place was found for them: and the stone that smote the image became a great mountain, and filled the whole earth. (KJV)
So Jesus is taking Psalm 118:22 and combining it with Daniel 2:34, in his prophecy against the leadership of Israel, but this does not mean that Psalm 188:22 can only be used in this one homiletic application. It can be used as a homily in many different ways, by people who have been rejected by the world and trust in God for deliverance. So we do not want to say Psalm 118 was referring to Pharisees and Sadducees, but rather that Jesus used Psalm 118 in this way.
The language of Ps 118:22 is clearly figurative/metaphorical. However, in understanding the message, one must understand first the literal meaning and then the application or spiritual meaning.
Spiritual Meaning
Ps 118:22 is quoted or alluded to several times in the NT making the elements of the metaphor well known.
Note that the metaphor in Ps 118:22 is used in slightly different ways in different places. In some of these we have:
Literal Meaning
There is an intriguing statement in 1 Kings 6:7 about the original construction of the temple of Solomon:
The temple was constructed using finished stones cut at the quarry, so that no hammer or chisel or any other iron tool was heard in the temple while it was being built.
There is a Rabbinic story (now impossible to verify as either truth or myth) that suggested that a finished stone from the quarry was rejected by the builders at the temple site but was later found to be correct stone for corner or capstone.
The story is preserved in some Rabbinic commentaries and repeated in places like this: https://visionforchristworld.com/the-rejected-cornerstone/
https://www.thewinedarksea.com/2017/03/19/stone-builders-rejected/
http://notexactlyaspreached.blogspot.com/2007/04/stone-builders-rejected.html
https://pjimgallagher.com/2015/01/21/rejected-stone-2/
It is now impossible to confirm or deny this story; perhaps it was a myth that arose, but in any case, it is well-known and alluded to in both the Ps 118 and the NT several times as documented above.
I know this is an already answered question, but I respectfully have a different interpretation.
The builders are not the Jewish people. The builders are their spiritual leaders. The Scribes, Pharisees, priests, elders, High Priest, and Sanhedrin.
It is they who, as the experts in the Law and the Prophets, rejected Jesus and His ministry, teaching, signs, miracles, and any Messianic fulfillment of the Scriptures.
Not only is this seen in the repeated clashes between them and Jesus, but also in the many verbal sparring matches they engaged in.
A main example is shown in the OP’s quote of Psalm 118:22-23 and is (IMO) affirmed in Jesus' pointed use of it directly to the priests and elders in Matthew 21:23, and in Matthew 21:42-45.
Matthew 21:23 NIV
Jesus entered the temple courts, and, while he was teaching, the chief priests and the elders of the people came to him. “By what authority are you doing these things?” they asked. “And who gave you this authority?”
Matthew 21:42-46 NIV
42 Jesus said to them, “Have you never read in the Scriptures: “‘The stone the builders rejected has become the cornerstone; the Lord has done this, and it is marvelous in our eyes’? 43 “Therefore I tell you that the kingdom of God will be taken away from you and given to a people who will produce its fruit. 44 Anyone who falls on this stone will be broken to pieces; anyone on whom it falls will be crushed.” 45 When the chief priests and the Pharisees heard Jesus’ parables, they knew he was talking about them. 46 They looked for a way to arrest him, but they were afraid of the crowd because the people held that he was a prophet.
