"I spoke to Dwayne on Sunday, he's hugely disappointed," said Howley, who toured with the Lions in 1997 and 2001 and will be a member of the coaching staff when the Lions travel to South Africa this summer.
"He's frustrated. The amount of rugby that Dwayne has played has been limited and at the moment he's not playing with the exuberance and the free-flow that we all know that Dwayne Peel can deliver."
Peel, who came through the ranks at former club Llanelli, signed for Sale Sharks from the Scarlets in the pre-season but has often been second choice to England's Richard Wigglesworth since his move to the North West of England.
Howley, who was himself a Test starter when the Lions toured Australia eight years ago, cited Peel's lack of game time as the major reason for his absence from his country's defence of their Grand Slam title.
"We're disappointed that he wasn't selected against Munster out in Munster which was a key game for Sale, although he came on and performed very well. I think he's equally frustrated.
"But as I said to Dwayne last night, the door's not closed. We know the talent, but he needs to be starting and playing on a regular basis to see the best of Dwayne Peel and Dwayne understands that."