KARMEI TZUR, WEST BANK - The rumble of a bulldozer preparing the ground for new homes started early Monday morning at this Jewish settlement in the southern West Bank, and residents said it was music to their ears after a 10-month building freeze.

"We're very happy," said Erez Naim, who lives near the building site. "For 10 months we were asleep. Now suddenly things are coming back to life."

Following the expiration of a moratorium on new construction in Israeli settlements at midnight Sunday, groundwork for housing projects resumed at several locations across the West Bank, with more expected after the end of the week-long Jewish holiday of Sukkot.

"Life goes on," said Orit Ben-Atar, secretary of this religiously observant community in the rocky hills north of the Palestinian city of Hebron. She said the new project at Karmei Tzur - 56 homes in a multilevel, hillside development - would house both residents and newcomers. All homes and trailers in the settlement are at full capacity, she said.

The resumption of new construction has imperiled the recently revived Israeli-Palestinian peace talks, following Palestinian warnings that continued Israeli building would spell the end of negotiations. However, Palestinian Authority President Mahmoud Abbas said Monday that he would not make any hasty decision to withdraw from the talks, leaving time for more U.S.-led diplomatic efforts to keep the negotiations alive.

"We will not have any quick reactions," Abbas said during a visit to Paris, adding that he would consult with the Palestinian leadership before taking the matter to a committee of the Arab League next Monday. "After this chain of meetings, we will be able to put out a position that clarifies the Palestinian and Arab position on this issue, now that Israel has refused to freeze settlements."

The Obama administration had pressed Israeli Prime Minister Binyamin Netanyahu to extend the moratorium on new construction, but he let it lapse, averting a potentially damaging confrontation with the settlers and their allies in his right-leaning coalition government. Netanyahu urged Abbas to continue the negotiations.

Abbas, for his part, called on Netanyahu on Monday to extend the freeze for three or four months to allow for negotiation of "fundamental issues."

U.S. State Department spokesman P.J. Crowley said the Obama administration was disappointed by the Israeli government's refusal to extend the moratorium.

"But we remain focused on our long-term objective and we'll be talking to the parties about the implications of the Israeli decision," he told reporters in New York, where Secretary of State Hillary Rodham Clinton is attending the U.N. General Assembly.

Clinton met with her counterparts from Great Britain, France, Canada and Syria to discuss the situation in the Middle East. Her meeting with Syrian Foreign Minister Walid al-Moallem underscored Washington's interest in also pushing forward on an Israeli-Syrian peace track.

(READ: Clinton's controversial record on the Middle East)

The U.S. special envoy to the Middle East, George Mitchell, is expected in the region on Tuesday for further talks on resolving the settlement dispute, and Netanyahu met Monday with former British prime minister Tony Blair, the representative of four Middle East mediators - the United States, the U.N., the European Union and Russia - to try to hammer out a compromise that would enable the talks to continue.

In Karmei Tzur, residents expressed concern that Netanyahu might buckle under heavy diplomatic pressure and renew the suspension of construction. "We have to see if he is a serious leader who is true to his word," Naim said. "I very much hope that he will have the strength to stand up to the nations of the world."

Seeking to tread a path between Washington and the pro-settlement parties in his own government, Netanyahu has said that the renewed construction would not be on a massive scale. In a previous meeting with Blair this month, he said that Israel would not build "all the tens of thousands of housing units in the pipeline" but that it would "not freeze the life" of the settlers, according to official accounts of the discussion.

Ben-Atar said there were young couples waiting for permanent housing at Karmei Tzur, as well as children and parents of residents who want homes of their own.

At Qiryat Netafim, a settlement in the northern West Bank where residents poured concrete for a new day-care center on Sunday, a developer said that a growing population of children in the settlement lacked a permanent facility.

Some 300,000 settlers live in 120 established communities and scores of unauthorized outposts in the West Bank. The Palestinians assert that continued expansion of the settlements on land they seek for a future state undermines peace talks. Netanyahu has argued that halting settlement building was never a precondition for talks, and should not be an impediment to the current negotiations.

Greenberg is a special correspondent. Staff writer Glenn Kessler in Washington contributed to this report.