Rockets general manager Daryl Morey celebrated the acquisition on Twitter: "Welcome to Houston @JLin7. We plan to hang on this time. You will love #RedNation."
Houston had Lin in training camp in December, and Morey regretted waiving him. The Rockets liked what they saw in the undrafted point guard, but had to let Lin go because they had Kyle Lowry and Goran Dragic on the roster.
The Rockets made it tough for the Knicks to keep Lin, though, by backloading their offer sheet with a $15 million salary in the third season. If the Knicks agreed to that deal, they would have faced a hefty luxury tax in 2014-15 because of other big contracts on their books - between $30 and $40 million.
The New York Times initially reported the Knicks' decision earlier in day.
One sports consultant said the adjustment to the offer sheet was a stroke of genius by Morey.
"The Rockets deserve a lot of credit for the way they've gone about this," said Marc Ganis, president of Chicago-based SportsCorp. "It was extremely intelligent - with an assassin's touch."
The Knicks, though, gave Lin his first real shot, picking him up after the Rockets waived him. He was briefly demoted to the developmental league, recalled, and finally got his chance when coach Mike D'Antoni put him in with the Knicks floundering at 8-15. Lin scored a career-high 25 points in a 99-92 win over New Jersey Nets and "Linsanity" was born.
Ganis thought the Knicks should swallow the "poison pill" anyway, because of the immeasurable value that Lin added to the franchise internationally.
Nets keep Humphries
The Brooklyn Nets continued their offseason barrage of signings, agreeing to a new, two-year deal with power forward Kris Humphries.
Humphries, 27, averaged 13.8 points and 11.0 rebounds for the Nets last season, and has averaged a double-double in back-to-back seasons. Last season's effort came on a one-year deal and for a bad team. Then still in New Jersey, the Nets went 22-44.
But Humphries, who will make $24 million over the life of the contract, will now be part of a new-look group in Brooklyn that includes guards Deron Williams and Joe Johnson, center Brook Lopez, and forward Gerald Wallace, who all either decided to re-sign with the Nets this month, or, in the case of Johnson, accept a trade from Atlanta to Brooklyn.