Pip does not tell the truth about his visit to Miss Havisham’s house because it is so bizarre he is not sure they will understand, and because he wants to keep Estella for himself.
When Pip is forced to go to Miss Havisham, he has no idea what to expect. Whatever he expected, it could not have come close to what actually happened. The house was so run-down and Miss Havisham was so bizarre that Pip did not even know where to begin in terms of explaining what happened. Therefore, he makes up a plausible story that seems to confirm what they want to hear.
Pip is concerned that he is going to be misunderstood if he tells the truth.
I felt convinced that if I described Miss Havisham's as my eyes had seen it, I should not be understood. Not only that, but I felt convinced that Miss Havisham too would not be understood … (ch 9, p. 46)
Although Pip does not understand Miss Havisham, he is all the more concerned that Mrs. Joe and Uncle Pumblechook will do her an injustice in misunderstanding her.
Uncle Pumblechook has no idea what Miss Havisham even looks like, so he has to confirm everything Pip says. As he realizes that they are buying his story, Pip’s imagination runs wild and he gets more and more elaborate.
“We played with flags,” I said. (I beg to observe that I think of myself with amazement, when I recall the lies I told on this occasion.) (ch 9, p. 48)
In the end, Joe realizes that Pip lied and feels terrible. He does not want to raise a liar. He is offended and saddened. He does not understand why Pip lied. Pip explains that he was embarrassed.
“… I wish you hadn't taught me to call knaves at cards, Jacks; and I wish my boots weren't so thick nor my hands so coarse.” (ch 9, p. 49)
Going to Miss Havisham was a shock. Until then, Pip did not have any reason to be ashamed of his shoes or his vocabulary. From that day on he looks at his humble life differently. He goes from acceptance to humiliation. It shadows his judgment from that day on.
Pip does this because his experience at Satis House was so odd that he doesn't really know how to truthfully describe it - most of all the strange, grotesque, ghost-like figure of Miss Havisham who shuns the light and remains frozen, as it were, in the past. However, he probably also wants to impress and astound his listeners (especially the odious Pumblechook). His visit to Satis House represents a step up the social ladder for him, and he feels he must act accordingly. Most of all, he has already become enchanted with the proud and beautiful young girl Estella at Satis House, whom he imagines (wrongly, as it turns out) to be high-born. Therefore he conjures up the picture of a resplendent setting which is a more fitting background for her, he feels, than actual strangeness and bleakness of Satis House.