City were twice in the lead at 1-0 and 2-1, but conceded two goals in five second-half minutes to leave Villa Park empty-handed.
"We played very well and deserved to win, but in five minutes [when Villa scored twice to go 3-2 up] we threw away everything good we did in the rest of the match," he told BBC Sport.
"The way we lost this game was incredible. We led twice, and we had control of the game.
"In general I was very happy with the way my team played today and we deserved a different score."
City are now fifth in the league table.