It may not seem evident in the beginning that Farquhar was only dreaming about his escape but there are some hints through the narration that will make this evident to the reader. For example, he started experiencing some neck pains while he was dreaming of being with his wife. He is said to have evaded all the bullets that were showered on him by the soldiers.
This is the point when Farquhar has seen his tree-lined home but he is already experiencing a swollen tongue and intense neck pain. It is quite sad that in his dream, he was able to see and hug his wife but he was unable to feel her hugs. At this point, he has died.