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Dogs commonly have skin allergies and it sounds like this is what you are seeing. You will commonly see allergies to fleas in this area. If your pet is not on a prescription flea preventative like frontline, you will want to get him started on it as soon as you can.
You might also want to see the vet to have a skin scraping done to rule out mange. Demodectic and sarcoptic mange can both cause the symptoms that you are seeing. One is contagious, the other is more of an immune disorder so your pet can get if even if he has not been exposed.
You might also want to talk with your vet about a special low allergy food that can help. Antihistamines like benadryl are alse effective against the itching. Some pets need a steroid injection to help the skin heal and stop the itch.
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