The unheralded Faroes took the lead on the hour when Christian Lamhauge Holst twisted and turned before firing a low shot past Maik Taylor to stun Nigel Worthington's side.
However, 16 minutes later Kyle Lafferty spared Northern Ireland's blushes with an accurate strike from just inside the area that clipped the post on its way into the net.
Kerr, a former Ireland manager, said the result was a fair reflection of his side's dogged efforts in the Svangaskard stadium, which is surrounded by rolling green hills.
"I think we at least deserved a point. I've had a couple of good days with the Faroes. Last year when we beat Lithuania was a great day," he told Sky Sports.
"Being from Ireland, with my parents from Belfast, it was a good day for me," added Kerr, who took over the Faroes job in April last year.
"There was complacency in the back of their minds. We deserved it (being held to a draw)," he told Sky Sports. "If you don't prepare mentally and individually that's what happens."
Tuesday's result was a blow to Northern Ireland's Euro 2012 qualifying chances and they stay in third place with five points behind Italy (seven) and Estonia (six) after three matches.
