Lancaster's side were hammered 30-3 at the Millennium Stadium in Cardiff on Saturday as defending champions Wales pipped them to the title.
When asked how he felt after the match, the England boss told BBC Sport: "Gutted.
"The start of the second half wasn't good enough and Wales thoroughly deserve the win. I don't think it was a psychological thing. Wales played well and we didn't turn up and we didn't match their physicality."
England headed into the match looking for their first Grand Slam since 2003.