The News Observer has this report from North Carolina. "In April and May, the number of existing homes sold on the Outer Banks plummeted by more than half compared with the same months last year. On the southernmost stretch of coast, sales in Brunswick County have dropped about the same amount. According to locally compiled statistics, sales on Emerald Isle are down more than 60 percent."

"Broker Marcia Parrott has seen downturns before. But, like the thousands of others who make their living from Outer Banks real estate, she can't help but wonder what's happening. 'Are we in a correction?' she said. 'Are we, I hesitate to use the word 'collapse,' totally falling apart? Or are we having a soft landing, which is what I heard someone say the other day.'"

"She said it was overdue, given the number of speculative houses that builders and developers put on the market, and the number of investors who jumped for quick profits. 'Our prices went up too fast and too high,' she said. 'We needed this.'"

"Prospective buyers have caught on to the downturn and are routinely offering 10 to 15 percent below asking price, even though they know the seller has already dropped his price, sometimes more than once. In one recent case, broker Mark Petty said, a potential buyer even offered less than a previous offer, apparently betting that the first potential buyer would walk away."

"Homes in the $500,000-and-under range are still selling, he said, but there's a glut of oceanfront homes. In some cases, speculators have been left with one worth less than they paid."

"Real estate is a huge industry on the Outer Banks. 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."

"On the Outer Banks the average home price fell 16 percent, or almost $100,000, in May, and sales were off 54 percent."

"John Hunter, an appraiser in Kill Devil Hills, said 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."