Home construction in the United States plunged in December, tumbling to its lowest point in 16 years, while a sign of future groundbreakings also dropped sharply.

Housing starts decreased 14% to a seasonally adjusted 1.006 million annual rate, after falling 7.9% in November to 1.173 million, the U.S. Commerce Department said today.

The big decline surprised Wall Street. Economists had expected a 5% drop to a 1.130 million annual rate. The level of 1.006 million was the lowest since 996,000 in May 1991.

Year over year, housing starts during December were 38.2% below the level of construction in December 2006.

A key indicator in today’s data suggested an even lower level of groundbreakings in the future. Building permits decreased 8.1% to a 1.068 million annual rate in December. Economists had expected permits to drop 2.6% to a rate of 1.130 million. November permits fell 0.7% to 1.162 million.

Meanwhile, the number of U.S. workers filing new claims for unemployment benefits last week unexpectedly fell to its lowest level in nearly four months, an encouraging sign amid growing concerns that the economy is falling into a recession.

Initial claims for jobless benefits fell 21,000 to 301,000 after seasonal adjustments in the week ended January 12, the U.S. Labor Department said today. That marked the third straight weekly decline, bringing claims down to their lowest level since the week of Sept. 22, 2007. Wall Street economists had expected an increase of 18,000 from the previous week.

The four-week average of new claims, which economists use to smooth out weekly volatility, also decreased 11,750 to 328,500. The four-week average has been declining since reaching its highest level in over two years in mid-December. Claims for the week ending January 5 were unrevised at 322,000.