Real Madrid remain seven points behind La Liga leaders Atletico Madrid after their 10-men were beaten by Levante.
Real had defender Eder Militao sent-off after nine minutes but they took the lead soon after through Marco Asensio.
Jose Luis Morales levelled for Levante and Roger Marti scored the winner with 12 minutes remaining to make amends for his earlier penalty miss.
Real No2 David Bettoni said afterwards: “It's a tough defeat to take, particularly after the 9th minute when it really became an uphill battle. We scored a good goal and then Levante's leveller knocked us. We started the second period very well, we kept pressing high and showed real character.
"We had two chances and then their second goal arrived, which was tough to take. We changed things around but we couldn't score. It's a painful defeat but I saw a team with a great attitude and personality. The team were sad in the dressing room but they're hungry to keep fighting until the end".
“We're not going to discuss refereeing decisions, you guys are there to assess what happened and have opinions. It's the way it goes. Levante won 1-2. We'll take away how we played, which wasn't easy with ten men because Levante are a good side. I saw a Real Madrid full of character, full of pride. We weren't able to win this game in the second half, that's all there is to it".
