Following last weekend's 4-1 loss to bitter rivals Liverpool, United were sunk 2-0 at Craven Cottage on Saturday.
And Rafael Benitez's side are now breathing down United's necks following their 5-0 thrashing of Aston Villa yesterday, which cut the gap at the top to one point - although the leaders have a game in hand.
However, Hodgson declared: "United are such a good team with so many good players, I still think they are favourites for the championship this year - but the last two defeats have given the teams chasing them that little bit more hope."
Fulham were rampant in the first half, taking the lead through Danny Murphy's penalty after Paul Scholes had been sent off for deliberate handball.
And they soaked up all United's pressure after the break before Zoltan Gera hit them with a sucker punch. The champions then finished with nine men as Wayne Rooney picked up two yellow cards.
Hodgson felt his side were well worth the points, adding: "Our first-half performance was quite outstanding. I didn't think we played quite as well in the second half. But we worked and fought hard."
United counterpart Sir Alex Ferguson acknowledged his team were not good enough.
"In the first half we never got started," he said.
"They were lively and got stuck in and we respect that - they lost 4-0 to us a couple of weeks ago. But it's disappointing we didn't meet the challenge."