Diagnosis
Low air pressure in the storage tank bladder. When the air pressure is too high, the water bladder can't expand fully. The system thinks the tank is full prematurely.
How to Fix It
Shut off the feed water and open the faucet to drain the tank completely. Check the air pressure at the Schrader valve on top of the blue tank with a tire gauge. It must be 6-8 PSI when the tank is 100% empty. If it's higher, press the valve stem to bleed air. If lower, use a bike pump to add air.
If That Didn't Work
The tank's internal bladder may have ruptured. A sure sign is water coming out of the air valve when you check pressure. If the bladder is bad, the entire blue storage tank must be replaced.
Heads Up
Check tank pressure with the water side fully drained. Any water pressure left in the tank will give a false high reading. Drain it until air comes out of the faucet.