Nick Woltemade scored twice as Newcastle jumped to a 2-0 lead before being pegged back by Reece James and Joao Pedro.
Howe said afterwards: "Difficult because we played so well today. An outstanding performance especially in the first half. Devasted for the lads that we didn't get the win.
"(The first half) was a reminder of how good we can be. Athletically so good and the press was excellent for us too and we were a real threat. It's further evidence we are improving. We need more of that."
On Woltemade, he said: "Nick played really well today Had his best game for us. He set the tone as the focal point of the attack. He ran tirelessly and took his chances brilliantly."
On the penalty shout against Chelsea defender Trevoh Chalobah, Howe continued: "I thought It was stonewall penalty and the defender went into it with too much aggression.
"Anywhere else on the pitch, that's a freekick. So really disappointed that wasn't given.
"It's painful for us because we have been in this position before. All we can do is learn from these experiences and try to improve. If we had those points back, we would have been in a different position."