It's my understanding that he can ask for items up to rarity 80. This happens to be a new item, so the price is still high. Typically both price and rarity are factored into his requests, but sometimes it just happens that you get an expensive item to turn in. I don't think it's a bug. :(

It definitely is tied to rarity rather than price. It is just unfortunate when he asks for a new item.

locking for you now!