Across the U.S., more home sales are collapsing before they close — and Hawaii isn’t immune. According to Redfin, nearly 1 in 7 real estate contracts were canceled in recent months, making it the second-highest fallout rate ever recorded. While national headlines may sound dramatic, there’s real data behind the concern — and several local factors at play on Oahu, especially in the condo market.

In this article, we’ll explore why deals are falling apart, what’s happening locally in Honolulu, and how buyers and sellers can stay one step ahead in a shifting market.

📉 National Trends: 14.3% of Real Estate Contracts Are Being Canceled

Redfin recently reported that 14.3% of homes under contract failed to close — a rate surpassed only during the height of the pandemic. The reasons range from high interest rates and stricter lending to inspection issues and buyer hesitancy.

While this stat is based on data from the mainland U.S., it aligns with softening activity and buyer caution we're seeing in the Hawaii condo market.

🏝️ What’s Happening in Hawaii (Especially Condos)?

Locally, single-family home contracts on Oahu are steady year-over-year:

  • 260 homes under contract (May 2025) vs. 258 last year

But the condo market is seeing fallout:

  • Deals under contract are down 16.7% year-over-year

  • Condo inventory is up 60%, offering more selection but also more hesitation from buyers

⚠️ Why Condos Are Being Hit the Hardest:

  1. Condo Insurance Premiums – Rising rates are making monthly costs unpredictable and unaffordable for some buyers.

  2. Fire Safety Ordinance (Bill 19-4) – Buildings without sprinkler systems or fire upgrades may deter financing or raise red flags in inspections.

  3. Aging Infrastructure – Many condos in Honolulu still rely on cast iron plumbing, which can lead to costly repairs and failed inspections.

  4. Fewer International Buyers – With a strong U.S. dollar, many international investors are sitting on the sidelines, especially in areas like Waikiki.

💡 So, What Can Buyers and Sellers Do?

While fallout is rising, deals are still closing every day — especially when the property is well-priced and expectations are clear.

Buyers should:

  • Be pre-approved with a flexible lender

  • Ask about assumable VA loans — which may offer lower fixed rates

  • Carefully inspect HOA documents, reserve studies, and plumbing/insurance status before committing

Sellers should:

  • Be upfront about building condition, maintenance fees, and disclosures

  • Price competitively, especially in buildings with known concerns

  • Offer seller concessions or credits if the buyer is hesitant due to financing or inspection hurdles

📞 Want Help Navigating a Complex Market?

Whether you're buying or selling, success in 2025 comes down to local knowledge and negotiation strategy. Let’s talk about what’s happening in your building, neighborhood, or price point.

📲 Contact David E. Buck (RB-20368) at 808-371-3509
🏢 Harcourts Island Real Estate — Local Knowledge. Trusted Results.