A bad season got even worse for Los Blancos on Saturday afternoon as they went down 1-0 on home soil to a late Pablo Fornals goal - the ninth time in 18 matches that they have dropped points this term.
Defeat for Madrid leaves them 16 points adrift of Barcelona and now focusing solely on cup competitions, but Nacho has denied suggestions that he and his teammates have simply given up hope of catching the runaway leaders.
"I do not know [what happened] really," he told beIN Sports. "I think we showed a good attitude, we have fought well, all the team. Villarreal are a team that likes possession, but we have played a good match in general.
"We had a corner and they caught us out of place, it's not a lack of attitude. Every game we play we go out and say that there are possibilities.
"I keep thinking about it because there are many points left, but logically every time we do not win the chances are much lower. We have the cup this week and we are very excited to keep fighting. It's not a lack of attitude."
Madrid face Leganes in the Copa del Rey in midweek, before welcoming Deportivo La Coruna to the Bernabeu on January 21.