NEW YORK, Jan 19 (Reuters) - The New York Federal Reserve on Friday reduced its estimate on U.S. gross domestic product growth for the first quarter of 2018 as a steeper-than-forecast drop in homebuilding in December offset a stronger-than-expected increase in industrial production last month.
The regional central bank's "Nowcast" model calculated the U.S. economy was expanding at an annualized pace of 3.07 percent in the first quarter, slower than the 3.21 percent rate calculated a week earlier.
The New York Fed raised its GDP estimate for the final three months of 2017 to 3.94 percent from 3.88 percent last week.
On Thursday, the government said domestic home construction fell 8.2 percent in December for its biggest percentage decline in 13 months to an annualized pace of 1.192 million units. Economists blamed the drop on unusually chilly weather at the end of December.
The Federal Reserve said on Wednesday factory production grew 0.9 percent last month stemming from a pickup in heating demand from the cold weather.
(Reporting by Richard Leong; Editing by Chizu Nomiyama and Susan Thomas)