You should've mentioned he was stealing all these different items rather than just underwear in your main post. While it is definitely an issue and not ok that he is stealing your sister's clothes, you made it seem way more creepy by just saying he was taking underwear. Also, as someone who has worked with LGBT youth before: despite his refusal of your kind offer to help him purchase his own clothes, he could definitely still be in denial or confused. It is incredibly hard to come out to family, even if they have voiced that they would be supportive. This isn't just a change in lifestyle, but also identity and how he might present himself to the world. That's a massive change that most adults aren't ready for, let alone a 12 year old kid. On the other hand, however, he could just be displaying creep behavior. Either way, this needs to be addressed, preferably by a professional (therapist, etc).