Was it a rental?  Or use it as a home office?  Take any depreciation on it?  You have to recapture any depreciation so it may not show as a loss for taxes.

For most people, the sale of your principal residence is not taxable. To get this tax break, you must have lived in the home 2 out of the last 5 years and your profit less than $250,000 ($500K married)

He said it was a second home.

The home that was sold was a vacation home,  so I'm pretty sure it is looked at as just plain income.  What I'm not clear on is do I still have to report it as income even though it was sold at a loss.

No, it's not just ordinary income ("plain income"). It would be a long term capital gain, if sold for a profit, and subject to lower tax rates.
 A loss on the sale of personal use property is not deductible. So, there will be no effect on your taxes this year.  You do NOT need to adjust your estimated payments. You don't even need to report the sale, on your taxes, unless you get a form 1099-S form the closing agent (check your closing documents)

Thanks Hal_Al,  that is good to know,   I will check for that 1099-S form .