Our daughter is a single parent and homeschooling our seven-year-old grandson. He asked for a doll house and dolls. When he told another boy about his doll house, the boy told him: "Only girls have doll houses and you must be a girl." This boy also heard our grandson tell our daughter "I love you" and said, "Only girls say stuff like that." Our daughter is trying to heal her son's hurt feelings, but has asked our advice. Our grandson does not show effeminate traits more than any other seven-year-old. He could easily have hit that boy, but didn't. What do you suggest?
It's important for children who are homeschooled to have opportunities to develop social skills with other children, but your daughter may want to limit the time her son spends with the little boy you mention.
It's admirable that your grandson did not hit the other child; as you can see, it's important that children who play and converse in sensitive ways know how to respond when others tease them. Help your grandson come up with appropriate responses to use when those things happen, such as, "Yes, I am a boy and boys can play with dollhouses, too." It's not fair to raise a child to be sensitive and not prepare him or her to deal with others who may be mean to him.
Encourage your daughter to find ways to allow your grandson to participate in activities with other children his age. Joining a soccer team, a church group, or a Cub Scout pack will enable your grandson to develop the social skills he will need in dealing with the rest of society.