That's never really explained. One minute he's trying to rob the old man's store and trashing it, then we hear he's back in Chicago and a year later he's formed his own ButterCream gang and is back to doing good deeds.
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After his meltdown, he finally sought help and became the kid that he was when he left for Chicago for the first time.
"Do you even remember what you came here to find?"
I think it's implied that the events in the climax of the movie had a profound effect on Pete once he managed to get back to Chicago. At his core, Pete was a good kid (as seen as him being the original leader of the gang) who was going through growing pains and an obvious conflict of character (his dad being white and his mother being Hispanic). Some could argue that it was his naivity that allowed him to get steered down the wrong path initially, as well. While he realized that he was no longer the same kid that everyone in his hometown knew and loved, he was still a good kid and wanted to make a difference in Chicago the same way that his hometown and friends had helped to make a difference in him.
I'm honestly kinda laughing right now as I write this character analysis. But yeah, I think that's what's to be implied as to how Pete got "good" again.
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Just a theory, but worth pointing out, nonetheless.