Try matching what he can do. Use concrete examples, like his toys. Here's an idea: You say, O for Octopus. He says it, you repeat it, then he says it again. This time you add one more word, such as O for orange octopus. Then wait for him to respond. It may take a few minutes as he processes the word you added. Just be patient. He may copy what you said or change it to another word or color.
With matching you are playing with him at his level, helping him to see that he can be successful at playing games with you. Then you challenge him with just a small added skill.
2 1/2 is not unusual for a child to still be talking in single words. It takes time and neurological pathways need to be built before he can start putting those words into sentences. Right now he is using concrete words. Words that mean something in his everyday life. But in sentences we use linking words that are ideas. This is a major leap for a toddler!
Give it time and try to be patient, he'll get there.