When the authentication is enabled you can see checkbox Require TLS/SSL... which is enabled. So you need to access the API using the https protocol. Also your server should be configured to support the protocol.
If you don't want this , uncheck the checkbox Require TLS/SSL... and proceed using regular http protocol
Having a port for https protocol is just like any other server configuration. Pega personal edition comes with an embedded tomcat server.
For enabling a https port on any tomcat server requires steps like getting a private SSL certificate (you can get a free one with a little search over internet). After getting that, you need to update this information in the server.xml file which will be present inside the tomcat folder.
@SumeethV I followed this procedure and that worked for me. My localhost is now 'secure' (with self-signing certificate). Keep in mind that this solution isn't just for Pega, but for all services running though localhost.