A rental unit is considered unhabitable if it substantially lacks :
"Buildings, grounds and appurtenances at the time of the commencement of the rental agreement in every part safe for normal and reasonably foreseeable uses, clean, sanitary and free from all accumulations of debris, filth, rubbish, garbage, rodents and vermin, and all areas under control of the landlord kept in every part safe for normal and reasonably foreseeable uses, clean, sanitary and free from all accumulations of debris, filth, rubbish, garbage, rodents and vermin"
From the sound of it, the carpets were not clean, sanitary, and free from filth at the commencement of the tenancy.
You have rights under ORS 90.360:
90.360 Effect of landlord noncompliance with rental agreement or obligation to maintain premises; generally. (1)(a) Except as provided in this chapter, if there is a material noncompliance by the landlord with the rental agreement or a noncompliance with ORS 90.320 or 90.730, the tenant may deliver a written notice to the landlord specifying the acts and omissions constituting the breach and that the rental agreement will terminate upon a date not less than 30 days after delivery of the notice if the breach is not remedied in seven days in the case of an essential service or 30 days in all other cases, and the rental agreement shall terminate as provided in the notice subject to paragraphs (b) and (c) of this subsection. However, in the case of a week-to-week tenancy, the rental agreement will terminate upon a date not less than seven days after delivery of the notice if the breach is not remedied.
(b) If the breach is remediable by repairs, the payment of damages or otherwise and if the landlord adequately remedies the breach before the date specified in the notice, the rental agreement shall not terminate by reason of the breach.
(c) If substantially the same act or omission that constituted a prior noncompliance of which notice was given recurs within six months, the tenant may terminate the rental agreement upon at least 14 days’ written notice specifying the breach and the date of termination of the rental agreement. However, in the case of a week-to-week tenancy, the tenant may terminate the rental agreement upon at least seven days’ written notice specifying the breach and date of termination of the rental agreement.
(2) Except as provided in this chapter, the tenant may recover damages and obtain injunctive relief for any noncompliance by the landlord with the rental agreement or ORS 90.320 or 90.730. The tenant shall not be entitled to recover damages for a landlord noncompliance with ORS 90.320 or 90.730 if the landlord neither knew nor reasonably should have known of the condition that constituted the noncompliance and:
(a) The tenant knew or reasonably should have known of the condition and failed to give actual notice to the landlord in a reasonable time prior to the occurrence of the personal injury, damage to personal property, diminution in rental value or other tenant loss resulting from the noncompliance; or
(b) The condition was caused after the tenancy began by the deliberate or negligent act or omission of someone other than the landlord or a person acting on behalf of the landlord.
(3) The remedy provided in subsection (2) of this section is in addition to any right of the tenant arising under subsection (1) of this section.
(4) The tenant may not terminate or recover damages under this section for a condition caused by the deliberate or negligent act or omission of the tenant or other person on the premises with the tenant’s permission or consent.
(5) If the rental agreement is terminated, the landlord shall return all security deposits and prepaid rent recoverable by the tenant under ORS 90.300. [Formerly 91.800; 1993 c.369 §8; 1995 c.559 §20; 1997 c.577 §19; 1999 c.603 §21; 1999 c.676 §13]
You may also want to check out ORS 90.368:
90.368 Repair of minor habitability defect. (1) As used in this section, “minor habitability defect”:
(a) Means a defect that may reasonably be repaired for not more than $300, such as the repair of leaky plumbing, stopped up toilets or faulty light switches.
(b) Does not mean the presence of mold, radon, asbestos or lead-based paint.
(2) If, contrary to ORS 90.320, the landlord fails to repair a minor habitability defect, the tenant may cause the repair of the defect and deduct from the tenant’s subsequent rent obligation the actual and reasonable cost of the repair work, not to exceed $300.
(3)(a) Prior to causing a repair under subsection (2) of this section, the tenant shall give the landlord written notice:
(A) Describing the minor habitability defect; and
(B) Stating the tenant’s intention to cause the repair of the defect and deduct the cost of the repair from a subsequent rent obligation if the landlord fails to make the repair by a specified date.
(b) The specified date for repair contained in a written notice given to a landlord under this subsection must be at least seven days after the date the notice is given to the landlord.
(c) If the landlord fails to make the repair by the specified date, the tenant may use the remedy provided by subsection (2) of this section.
(d) Service or delivery of the required written notice shall be made as provided under ORS 90.155.
(4)(a) Any repair work performed under this section must be performed in a workmanlike manner and be in compliance with state statutes, local ordinances and the state building code.
(b) The landlord may specify the people to perform the repair work if the landlord’s specifications are reasonable and do not diminish the tenant’s rights under this section.
(c) The tenant may not perform work to repair the defect.
(d) To deduct the repair cost from the rent, the tenant must provide to the landlord a written statement, prepared by the person who made the repair, showing the actual cost of the repair.
(5) A tenant may not cause the repair of a defect under this section if:
(a) Within the time specified in the notice, the landlord substantially repairs the defect;
(b) After the time specified in the notice, but before the tenant causes the repair to be made, the landlord substantially repairs the defect;
(c) The tenant has prevented the landlord from making the repair;
(d) The defect was caused by a deliberate or negligent act or omission of the tenant or of a person on the premises with the tenant’s consent;
(e) The tenant knew of the defect for more than six months before giving notice under this section; or
(f) The tenant has previously used the remedy provided by this section for the same occurrence of the defect.
(6) If the tenant proceeds under this section, the tenant may not proceed under ORS 90.360 (1) as to that breach, but may use any other available remedy in addition to the remedy provided by this section. [2007 c.508 §2]