What a good method you have discovered for helping your son break words into syllables. You are exactly on the right track!
First, boys are often a bit slower in catching on to reading than girls. In addition, it isn't unusual for children to rush through words on the page, which leads to errors, even with easy words as you have noted.
It appears that your son is in a hurry to get through the words. Sounding out takes time; it is not uncommon for children to guess at words rather than slow down to sound them out. I would encourage you to continue with the excellent method you are using, with this slight difference: note missed words as he reads, then when he has finished reading the selection, give your son the list and the blocks to break the missed words into syllables or 'pieces' himself. Encourage him to listen to the word parts as he sounds the word out. Then have him write those word parts that he hears, and finally, write the complete word right next to the 'pieces.' Be sure to lavish praise on him as he works through this process--'good job sounding out,' etc.
Slow his reading pace by cutting a narrow, two-inch slot in an index card or piece of heavy paper. When the card is placed over the page, it should reveal only a few words at a time. [This will show him the reading pace and force him to focus more carefully on each word. However, do this exercise only for the first part of the lesson; the ultimate goal is still to have him read fluidly, which he cannot do if he uses the card for all reading.]
Make cards or sticky notes of the commonly missed easy words, such as of, from, and for. Sound the words out with him, telling him to make special note of the letter sound/s that begin the word. If possible, post these notes close to his school area for reference. The words can be sounded out before reading time each day for a few days, keeping the notes up for a gentle reminder now and then.
Most of all, encourage him to read on his own, particularly library books at his level. If he is reluctant to do this voluntarily, you might cheerfully announce that each afternoon there will be a fifteen-minute reading time while you prepare dinner, or some such.
You are on the right track; by practicing these methods, I think you'll see a big difference in your son's reading level in a few months.
May our good Jesus bless and guide your homeschooling days.