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In Brunswick County, by contrast, new construction is competing with existing homes, he said. The average sales price there was up 37 percent in May, even though the number of existing homes sold was down 60 percent.

The opposite is the case on the Outer Banks, where the average home price fell 16 percent, or almost $100,000, in May, and sales were off 54 percent.

Wake-up call for some

Real estate is a huge industry on the Outer Banks. The downturn is hurting thousands of brokers, appraisers, builders, mortgage brokers and, indirectly, the rest of the local economy. When Petty got into the business a little over a decade ago, there were 400 to 500 brokers on the Outer Banks, he said. Now there are about 1,100, including many who haven't been in the business long and perhaps thought the market would always be booming.

"It's probably a rude awakening for them," he said.

John Hunter, an appraiser in Kill Devil Hills, said that in 26 years of valuing real estate from Ocracoke north to Virginia he has weathered at least three cycles in property values. This time, he said, the market has a better foundation to build on when it swings back because there are few buildable tracts of any size on the barrier islands, so supply will be tighter.

For now, though, he's seeing such things as a seller who turned down a $1.5 million offer a year ago accepting $1.2 million recently.

Income from summer rentals is important for many homeowners on the barrier islands. Hunter thinks the nature of the downturn will become clearer in the fall, once people who might have been thinking about bailing out ponder that long stretch of winter mortgage payments.

He, too, says people should hang on, for several reasons. Beach property is limited, a certain percentage of people will want to own a house there, and baby boomers are about to start retiring in large numbers.

"If you just wait until the next cycle, you'll be glad you did," he said.

Still, many on the beaches wonder when that cycle will come.

"If I knew that, I wouldn't be so worried," said Parrott, the real estate broker.

(Staff writer Jerry Allegood contributed to this report.)

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