Hurricane Julio has been downgraded to a Category 2 storm with maximum sustained winds of 170 km/h and is predicted to miss the Hawaiian islands by about 320 kilometres.

National Weather Service officials say the storm, which is about 1,450 kilometres east of Hawaii, is expected to continue to weaken as it approaches cooler waters in the Pacific.

That's good news for the island chain dealing with strong winds and heavy rain from Tropical Storm Iselle, which hit the Big Island early Friday.

Around 5 p.m. local time the National Weather Service lifted its tropical storm warning, as the worst of the weather rolled over the islands. 

In the last of the rain, coffee farmers on the Big Island assessed the damage to their crops, while tourists around Honolulu are back out on the streets.

While Julio's path could still change, experts remained optimistic.

Tropical storm Iselle's eye crossed onto the Big Island about eight kilometres east of Pahala with winds at 96 km/h at 2:30 a.m. Hawaii Standard Time. Iselle is the first tropical storm to hit the state in 22 years.

So far the extent of damage across the Big Island, one of the least populated in the state, has been limited to downed trees and some roof damage, Hawaii County Civil Defence spokesman John Drummond said.

About 21,000 homes remained without power, he said.

Drummond said the main part of the storm came ashore in a rural and sparsely populated region and didn't sweep across the entire island.

Heavy rains, wind

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Anne Kllingshirn, of Kailua, Hawaii walks with her daughter as storm clouds float overhead on Thursday. By 2 a.m. Hawaii Standard Time on Friday, the storm was swirling about 16 kilometres from the coastline. (Luci Pemoni/Associated Press)

Heavy rains and wind from the storm's outer bands were also hitting Maui and Oahu on Friday as Iselle moved to the west but south of the other islands.

"We are getting some strong gusts," Maui resident Amanda Schaefer said, adding that pelting rain on her windows kept her up Thursday night.

The Big Island remained under a flash flood warning for much of the day.

Iselle was downgraded to a tropical storm about 80 kilometres from shore at 11 p.m. HST Thursday, and within hours its winds had slowed to 96 km/h, well below the 119 km/h threshold for a hurricane.

Experts said wind shear chopping at the system and the Big Island's mountainous terrain helped weaken the storm.

"As wind blows into the terrain, the terrain kind of redirects the wind," said meteorologist Chris Brenchley of the U.S. National Weather Service in Honolulu.