After winning eight of their first nine games this season, the Knicks have lost back-to-back outings in Texas.
Jeremy Lin, who signed an offer sheet with Houston this year that the Knicks chose not to match, received most of the pre-game attention.
Harden, however, made all 16 of his free throw attempts while scoring 33 points and Parsons had the most productive game of his two-year career. He scored 31 points and hit 13-of-17 from the field.
Lin had 13 points and seven rebounds against his former team. Houston broke things open with a 37-point second quarter that gave the Rockets a 72-57 halftime lead and the Knicks melted away after the break.
Houston won its second straight to move within a game of .500. It was the Rockets' sixth consecutive victory over the Knicks.
Carmelo Anthony scored 37 points for New York, hitting seven 3-pointers.