Unai Emery’s side could have closed to within four points of leaders Arsenal if they had beaten Everton at Villa Park.
But they wasted the chance to put pressure on the Gunners with a limp performance that was punished by Thierno Barry’s second-half winner.
After Arsenal’s goalless draw at Nottingham Forest on Saturday, Mikel Arteta’s men are seven points clear of third-placed Villa.
Second-placed Manchester City are also seven points behind the leaders following their 2-0 loss at Manchester United on Saturday.
Arsenal are chasing a first English title since 2004 and the stumbles from City and Villa this weekend have tightened their grip on the title race.
“There are other teams with more potential than us,” Emery said of Villa’s fading title chances.
“We lost a very good opportunity. We did a very good season until now, but today we lost.
“We had our chances, we didn’t score and they had less chances, but they scored.”
Adding to Villa’s woes, their captain John McGinn limped off with a first-half injury.
Villa had won their previous 11 home games in all competitions.
At rain-lashed Molineux, Eddie Howe’s Newcastle were unable to prise open the Wolves defence as two points slipped away.
Wins over Burnley, Crystal Palace and Leeds had bolstered their bid to qualify for next season’s Champions League.
But the Magpies are stuck in eighth place after failing to beat bottom-of-the-table Wolves.
Following their disappointing 2-0 defeat against Manchester City in the League Cup semi-final first leg on Tuesday, it was another frustrating result for Newcastle.
“We needed to do more in attack. I expected us to do better and create more,” Howe said after Newcastle took 85 minutes to muster a shot on target.
“Football is such a strange game. We scored four against Leeds and looked free-scoring, but today we struggled.”
Nick Woltemade has now gone seven games without a goal, scoring just twice in 13 appearances after squandering two good headed chances.
With crucial matches against top-four rivals Aston Villa and Liverpool looming before the end of the month, Howe’s men must get back on track quickly.
Wolves are now unbeaten in four league games but still sit 14 points from safety. (AFP)
