5 year old with vivid dreams or hallucinations?

This past year my son has had a particular vivid dream about three times. They're always pretty much the same.

The first one was about 7 months ago I heard my son year old jabbering and crying in his room. He was standing across the room acting afraid. I kept talking to him soothingly trying to get him back in bed. He wouldn't go and kept saying "bugs". I and I sat on his bed and smoothed it out and showed him there were no bugs and sat down with him in my lap and he was freaking out, arching his back and trying not to touch the bed. I took him to our bed. As we were leaving his room he stopped and looked down and said "rocks" and walked very gingerly across his doorway as if he were walking across rocks.

He laid down in our bed but was clinging to me. He kept sitting up like he was startled and stared at his pillow and said "bugs". Again I kept telling him there were no bugs. Every time I moved or shifted he sat up startled,  I couldn't calm him down. Every time I touched him trying to reassure him he would jump as if I were the bugs. Finally he jumped out of our bed and kept crying bugs so my husband laid him directly on his chest and he fell asleep that way.
In morning he said  "Bugs bite you". And I reassured him no bugs were going to bite him. He said "Bugs outside" and I agreed. Then I made his breakfast  and he stared at his chair and said "bugs". I told him there were no bugs in his chair.
So it was still on his mind, apparently.

The thing that concerns me is I've never seen him act like this. I'm assuming he had some sort of bad dream but I am very careful about what he watches on TV. He only sees Disney or PBS shows.
If it was a bad dream why was he still acting like there were bugs everywhere when he was awake? Why was he freaking out?  Did my son have a nightmare or some sort of hallucination about bugs?
He did this again last night about bees. My husband said he did see bees this week. This morning he's acting fine.
Can you tell me what this was?

[Kevin Kennedy, Ph.D.]

If he was truly awake when you approached him, he had experienced a nightmare. Night terrors, on the other hand, are not accompanied by being fully awake and there is no recollection of the experience. So it is likely he experienced a nightmare and over ime the impacytwill disappear.

[momof1son]

My son had terrible night terrors / nightmares / hallucinations while taking Singulair for his allergies / asthma.  He called them "real-dreams."  He had many, many other side effects as well.  If your son is on any medications, check out the website medications.com or askapatient.com.  

These side effects are thought to be very rare but actually happen more frequently than anyone knows but we dont associate a nightmare with an allergy pill.

I hope he feels better soon.

[April2]

Thanks momof1son! No, he's not on any medication. Hopefully he'll outgrow this soon!

Thank you, Doctor Kennedy as well. He doesn't do this often, just three times this year so hopefully he won't have any more.

Thank you both for responding.
Sincerely,
April