Pump will build up pressure to 60 psi but when using water the pump will not build back pressure above 40 psi, but then when not using water it will build back up to 60 psi. What is the cause of this?

Sounds like the pump cannot supply enough volume to keep up with what you are using. You can do a simple test to find out. Turn on water until the pump kicks on. Turn off the water, and time how long it takes for the pump to get up to cut off pressure. Write that time down. Now turn water on and measure how many gallons you get until the pump kicks on again.

For illustration, let's suppose it takes three minutes to get to cut off pressure. Then you get nine gallons before the pump cuts on again. That would be three gallons per minute. You would like to get at least four or five.

Reason? Could be a weak pump, well cannot deliver enough water, or bad well pipe.