Israeli officials were lobbying intensively to try to persuade the EU to postpone, if not soften, the sanctions.
Israel granted initial approval for new homes in Modiin Ilit, a West Bank settlement near Jerusalem and part of the territorial blocs it wants to annex eventually.
Kerry, on his sixth Middle East mission, was upbeat.
“We have been able to narrow these gaps very significantly,” he told reporters on Wednesday. “And so we continue to get closer and I continue to remain hopeful that the sides can soon be able to come and sit at the same table.”