A couple of thougts come to mind.
If he is getting really frustrated, it may be a good idea to take a break from it for awhile. My daughter was having a bit of a hard time with beginning reading for awhile, and then our new baby came and things went kind of upside-down for awhile despite my good intentions of at least keeping up some kind of reading practice. So we didn’t do anything for like a month. I was amazed that when we came back to it after things had settled down that her road-block seemed to have disappeared and she has made fantastic progress ever since. I hadn’t intended to take a break, but it really did seem to help her when she was becoming frustrated. (We did something similar when she had sort of hit a roadblock with handwriting too.)
Another thing that helped us during the blending stage that you are describing was a little game that we took out of the phonics pathways book (which we are no longer using – there were a lot of things we didn’t like about it, but this game was helpful) called the train game. The book had little cards that looked like train cars each with different letters on them (you could also use letter magnets or even just little index cards with letters written on them.) Let’s say you wanted to try and blend the letters “sa”. So, you would take the letter s card and the letter a card and start with them on opposite sides of the table. First you would look at the s and sound “ss”, then you would look over at the a and say “a”. Then you push them a little closer together and do it again. Keep on doing this, each time doing it a little faster until the two letters meet in the middle, when you would pronounce the blend together: “sa”. I hope that kind of makes sense. It’s similar to the idea that art was sharing above about ‘saying it slow’, just with a physical element to it (saying the sounds while physically pushing the letters closer together). It helped us a lot. We also used this same method to help with blending three and four letter words – starting with the two or three letter blend she could already read on one end and the final letter on the other. I generally found it was less stressful in these early stages (before we were reading enough words to jump into sentences and stories) to play little games like this and use little cards with word families and build words out of letter tiles or magnets than to try and get her to read directly out of the phonics book. She got easily overwhelmed by too much “stuff” on each page and would shut down without really trying.
I ended up ditching the phonics book in the end, after I stumbled across Ruth Beechick’s book “The 3R’s”. She gives some really helpful, common sense, ‘do-able’ advice for teaching reading without using a curriculum. You may find it helpful too if you can get hold of a copy. It’s available pretty inexpensively on Amazon.
I think that getting the hang of the basic idea of blending the letters together is probably the biggest hurdle in beginning reading. Once he gets the hang of it, it will be MUCH easier from there on out. I had read that somewhere when I was first starting to teach my dd how to read, and have found it to be really true. Hang in there, don’t be afraid to take a break for awhile if you need to, and then think about different ideas to try to make it less pressure for him when you decide to start back up with it again.
HTH!