Speaking during a visit to Morocco, Mr Kerry said it was "reality check time" and there was a limit to effort the US could make on the peace process if the parties themselves were unwilling to take constructive measures.
He said: "This is not an open-ended effort. It is reality check time and we intend to evaluate precisely what the next steps will be."
Mr Kerry said he was returning to Washington to consult with the Obama administration on the next step. US officials said Mr Kerry had been blindsided by moves by Israeli and Palestinian leaders that affected the negotiations process.
Mr Kerry added: "There are limits in the amount of time and effort the US can spend if the parties themselves are unwilling to take construction steps in order to be able to move forward.
"They say they want to continue, neither party has said they have called it off, but we are not going to sit there indefinitely."
The talks crisis erupted at the weekend when Israel refused to release a group of Palestinian prisoners under the terms of a previous deal unless it had assurances the Palestinians would continue talks beyond an initial end-April deadline.
Mr Kerry arrived in Jerusalem on Monday to put the negotiations back on track, but his efforts were undermined when Palestinians signed 15 international conventions that gave them greater leverage against Israel.
Israel has called off the planned release of Palestinian prisoners meant to advance peacemaking and called for the US-sponsored negotiations to be reviewed.
Mr Kerry has spent much of his first year as America's top diplomat working on the difficult Middle East peace process.
He broke off twice from his current trip to see Israeli and Palestinian leaders.