Home builders in the United States slowed groundbreakings during July, pulling construction to its lowest rate in 10 years as sales keep tumbling and credit tightens.

Housing starts decreased by 6.1% to a seasonally adjusted 1.381 million annual rate, after rising 2.1% in June to 1.470 million, the U.S. Commerce Department said today.

July starts were lower than Wall Street had predicted. Economists had called for a 4.6% drop to a 1.400 million annual rate.

It was the lowest level of starts since 1.355 million in January 1997.

Today’s data contained a sign things will get even worse: building permits tumbled 2.8% to a 1.373 million annual rate in July. Economists had expected permits to drop 0.6% to a rate of 1.405 million. June permits fell 7.0% to 1.413 million. Permits are an indicator of future building activity.

July single-family housing starts decreased 7.3% to 1.070 million. Construction of housing with two or more units fell 1.6% to 311,000; within that category, groundbreakings of homes with five or more units — or multi-family — were 2.5% lower.

Regionally, housing starts decreased by 1.3% in the Northeast, 3.7% in the West, and 11.0% in the South. Construction rose in the Midwest, up 2.6%.

Meanwhile, the number of U.S. workers filing new claims for jobless benefits increased for a third-straight time last week to its highest level in two months, suggesting that labor markets continue to soften after tepid job gains in July.

Jobless claims were up 6,000 to 322,000 on a seasonally-adjusted basis in the week ended Aug. 11, the Labor Department said Thursday. Claims for the Aug. 4 week were unrevised.

Wall Street forecasts had called for 1,000 decline last week to 315,000/

The four-week average, which economists use to gauge underlying labor market trends, rose 4,750 last week to 312,500.