The debate over whether The Pilgrim's Progress is a true allegory or a precursor to the novel has raged over centuries. The great poet and literary critic Samuel Taylor Coleridge regarded it as a kind of proto-novel which expressed the growing individualism of Bunyan's time. Whether or not one agrees with Coleridge's assessment, we can nonetheless identify certain characteristics that the book shares with the novel, which first developed as we know it today in the eighteenth century.
For one thing, The Pilgrim's Progress boasts an extensive cast of memorable characters. Those characters may well be allegorical, but they nonetheless possess a distinctive human quality that makes them more engaging to the reader. Though Bunyan is keen to ensure that his religious message comes across clearly, he doesn't lose sight of the fact that the characters through which he conveys that message need to be believable.
An additional factor that The Pilgrim's Progress shares with the novel is its narrative structure. Christian's journey isn't simply a religious allegory; there's a human story to be told here, too, and Bunyan proceeds to tell it using the kind of narrative arc one normally associates with the novel. In the course of his epic journey, Christian must overcome many obstacles and vanquish numerous enemies before he finally enters the Celestial City in glory to the sound of trumpets.
Maybe The Pilgrim's Progress isn't technically a novel, but in substance at least it certainly has all the hallmarks of a novel, and a very great one at that.