It’s pretty normal, and if he’s a sophomore, the PI may not fully engage (or engage more) with undergrads until they are juniors or seniors. He can still learn a whole lot from that graduate student, especially if the graduate student is advanced. Unfortunately, mentoring and teaching undergraduates is very time-consuming and not professionally rewarding for PIs (although it can be personally rewarding).
Even at schools where a third of the department continues to graduate school, professors are still usually excited when strong students want to go, so I wouldn’t worry about that too much.
Often, graduate students will write the skeleton of the letter of recommendation, and the professor will polish it up and submit. This is often the best arrangement for an undergrad - they get a letter from someone who really knows them and their work, but they also get the signature and reputation of the professor behind it.