I’d give that to the 2000’s. I love the Blair Witch Project (but that was 1999), but most of its imitators (including the Paranormal Activity films) were garbage to me and I felt that dominated horror in the 2000s, along with torture porn which barely counts as horror to me (I do like the first two Saw films, just never got around to 3 and beyond).
Honestly the only good or better horror films of the 2000s for me were The Mist, The Others, 28 Days Later, Silent Hill 1, and I’ll slightly count Trick r Treat (great film, but not scary) and The Strangers (great suspense, STUPID characters even by slasher standards). And okay, I did like 2003’s Texas Chainsaw Massacre remake and the Dawn of the Dead remake but there were more shitty remakes overall (looking at you Halloween 07 and its sequel) and it’s not the best sign if I have to start listing remakes this soon.
Now if we go foreign, then yeah things VASTLY improve. Tons of countries outside of the US were popping out great horror movies then, and I think the US’s lack of good horror movies of that decade is why it seemed passionate movie fans began to seek out options outside of the US. But foreign horror film fandom has seemed to die down over the years, and while that could be due to their general quality, I think it’s because the US has gotten back on track with their own horror films in the last 10 years or so so movie fans feel less of a need to seek options. There was a great YouTube video that went into this but sadly I can’t seem to find it now.
In terms of the 90’s though:
Blair Witch Project
Scream 1 and 2
Wes Craven’s New Nightmare
In the Mouth of Madness
Halloween H20 (flawed, but hey better than the 3 installments of the 2000’s)
I Know What You Did Last Summer
And I might argue Silence of the Lambs though some might say that’s far more of a thriller/suspense than horror. And hey, since I did mention Trick r Treat for the 2000’s, then I feel justified in listing Army of Darkness for the 90’s, not scary but a TON of fun.
It’s not like the 90’s is vastly better than the 2000’s for American horror, and for me the 2010s, 1980s, and 70s each obliterate both decades in horror quality, but I personally give the edge to the 90’s over 2000s. Pretty much no remakes and there just felt there was a bit more interesting stuff being done. But again, it is close.
(edit: and upon posting this, I just noticed you said “one of the worst decades” and not “the worst”, so this might have been preaching to the choir)