Private construction rose by 0.2 percent to an all-time high of $892.4 billion even though home construction was unchanged. November saw a 0.5 percent rise in nonresidential construction, reflecting big gains in construction of offices, hotels and the category that includes shopping malls.

"The overall momentum in construction remains solid," said Brian Bethune, an economist at Global Insight. "We expect this pattern to continue, with public and commercial construction taking the leadership baton in 2006 as housing starts ease back moderately."

Much of the expected drop in housing starts is tied to interest rate increases engineered by the Federal Reserve in 2004 and 2005. On Tuesday, the Fed hinted in minutes from a Dec. 13 policy meeting that an end to these rate hikes may be in sight.

"Views differed on how much future tightening might be required," the minutes said, explaining why changes were made to the Fed's policy statement released after the December meeting.

One of the most important changes was that the Fed dropped language — contained in previous statements — that described interest rates as being too low, or accommodative. Economists viewed that as a sign that the Fed was winding down its rate-raising campaign.

For the second straight month, the prices-paid index for the Mountain region declined, moving to 93.3 from November's 93.8, according to the Creighton report. While December's reading still indicates inflationary pressures, Goss wrote that he expects those pressures to weaken in the months ahead.

"While our inflation gauge and most national inflation indicators point to somewhat lower inflationary pressures ahead, I expect the Federal Reserve Open Market Committee to raise interest rates at its next meeting on Jan. 31," Goss wrote. "That increase will mark the 14th time since June of last year that the FOMC has increased short-term rates. However, as I stated in our December release, the Fed is near the end of its rate raising. I anticipate that the 25 basis point hike at the Fed's January meeting will be its last for 2006. Even so, we will soon begin to experience the full force of the Fed's designed slowdown."

The Fed minutes helped boost stock markets on Tuesday. The Dow Jones industrial average rose 129.91, or 1.21 percent, to 10,847.41. The Standard & Poor's 500 index added 20.51, or 1.64 percent, to 1,268.80, and the Nasdaq composite index gained 38.42, or 1.74 percent, to 2,243.74.

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Contributing: Martin Crutsinger; Jeannine Aversa

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E-mail: gkratz@desnews.com