Both are correct. Past simple (didn't listen) focuses on the completed action. Past continuous (wasn't listening) focuses on the action being progressive/ continuous at a particular moment. I would probably actually opt for the past perfect tense. I didn't understand yesterday's hw because I hadn't listened to the teacher in class. We use past perfect for 2 actions in the past, first you didn't listen and second you didn't understand.

Either. Past simple. 2 completed actions in the past. I didn't understand because I didn't listen. Past continuous. 1 past action within another action in the past. I didn't understand because I wasn't listening. Both are grammatically correct. If you want to emphasise duration or make it sound like you repeatedly failed to listen - use the continuous form. If you're simply imparting information then the past simple will suffice. More examples: I didn't work yesterday as I felt ill all day. I didn't work yesterday as I was feeling ill all day. (there really isn't any difference here as the 'all day' tells you the duration and could be emphasised nicely - I was feeling ill ALL day! I didn't remember the instructions because I didn't pay attention to the manager. I didn't remember the instructions because I wasn't paying attention to the manager. (I can't see any difference here either, in meaning) If we turn it around> Why didn't you remember the instructions? Because I didn't listen! Because I wasn't listening! (no difference) There are, of course, times you NEED the continuous form, but not so far in what we've talked about.

Hi, I didn't understand yesterday's homework because I wasn't listening to the teacher in class. Listening in this case is a continuous process over a period of time, so it is more appropriate to use the past continuous tense.