AIO? Younger cousin continously calls me the N word after I told him to stop (I'm red he's blue)

 Messaged my younger cousin last night asking if he was gonna come over for Christmas. He said that he didn't know, which confused me because I thought he was, and I was messaging just to double check. When I asked him again about an hour later that's when he began to call me the NW. I got pretty upset because I don't even like cuss words, let alone slurs, and he was saying it in a demeaning manor. I'll never tell someone what they can and can't say, I just didn't want him to call me that.
 He was upset at the time due to a personal issue I have censored in respect of his privacy. Although it was vague and didn't go into detail, I wouldn't want to air out his personal issues.
 We're both Hispanic and our family often uses the NW in more of a "friendly" manor. Even though I feel that they should not be using it at all, that isn't up to me.
  I'm wondering if I'm overreacting to this or if it truly isnt that big of a deal. We were always pretty close but this interaction is making me a bit uncomfortable and I don't know if this will blow over. 
 Please excuse any formatting mistakes, currently on mobile and I've never made a post like this.