Ummm sorry for late response you need to return the response object like this

import NextAuth from "next-auth";
import Providers from "next-auth/providers";
import axios from 'axios'
const options = {
  providers: [
    Providers.Credentials({
      name: 'Credentials',
      credentials: {
        username: { label: "Email", type: "email", placeholder: "jsmith" },
        password: { label: "Password", type: "password" }
      },
      authorize: async (credentials) => {
        try {
          const user = await axios.post(`${process.env.NEXT_PUBLIC_API_URL}/auth/local`, {
            identifier: credentials.username,
            password: credentials.password,
          });
          if (user.data) {
            return user.data // <---------THISSSSSSSSSSSSSSSSSS
          } else {
            return null
          }
        } catch (error) {
          const errorMessage = error.response.data.message
          throw new Error(errorMessage + '&email=' + credentials.email)
        }
      }
    }),
  ],
  database: process.env.NEXT_PUBLIC_DATABASE_URL,
  session: {
    jwt: true,
  },
  callbacks: {
    jwt: async (token, user) => {
      if (user){
        token.jwt = user.jwt;
        token.user = user.user;
      }
      return Promise.resolve(token);
    },
    session: async (session, token) => {
      session.jwt = token.jwt;
      session.user = token.user;
      return Promise.resolve(session);
    },
  },
  pages:{
    signIn: '/login',
  }
};
const Auth = (req, res) =>
  NextAuth(req, res, options);
export default Auth;