He never had a sister. His abusive mother dressed him up like a girl and called him Carrie-Anne. That's why he killed his mother and the father. In order to cope with the fact that he himself, killed his parents, he created the sister, which was really himself and told everyone that she was the one that killed his parents.
The kidnapped girl was there to represent the sister so he himself could believe there was a sister.
Carrie-Anne was his real sister, she wasn't a figment of his imagination. She died when they were little from falling off there swing set, the drug addict parents covered up her death turned Ryan into Carrie-Anne and made the whole town believe that Ryan was sent to live with an Aunt. When he couldn't handle it anymore he lost it murdered his parents and became Ryan again the town assumed "Carrie-Anne" killed the parents and ran away. Ryan then at some point began kidnapping girls locking them in the secret room downstairs and tried to turn them into his long dead sister.