Sounds like your host is pulling a fast one, of course he can cancel it from his side.
It's likely your host is trying to avoid the penalties a host is liable for when cancelling ( automated black review, blocked calendar and upto a 100 dollar fine.) However these are not your concern.
You can cancel the room yourself but you should certainly choose "My host needs to cancel" option. This makes sure you don't lose out on a retained service fee.
The host should confirm this cancellation, but if he decides not to, then you should call airbnb directly. You can also leave him an instant messages telling him to accept otherwise explain you will be contacting airbnb to ask them to intervene.
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