The Canaries were 2-0 down inside five minutes but two goals from Russell Martin, the second coming with 15 minutes left on the clock against 10 men, kept hopes of a comeback alive.
However, Norwich were left pointless for the second home game in a week and Hughton was left to reflect on what might have been.
"City showed why they spend the amount of money they do for the offensive players they have, but you can't be 2-0 down so early on and expect to have a good day," Hughton said.
"However, we displayed great character and certainly at 4-3 it seemed it might be going our way, but again they showed real good quality.
"I cannot fault the endeavour of the players we have got, so now we will look to go again."
City counterpart Roberto Mancini was unhappy with the decision to send Samir Nasri off late in the first half, and Hughton empathised with his complaints about the standard of the refereeing.
He added: "In the build-up to their second goal, there was a foul by Vincent Kompany in midfield, which was disappointing.
"On the sending off, there was certainly a coming together of heads and some movement, now whether that was enough for a sending off... if the referee has given it for that reason, was it a bit harsh? Probably yes."