You should cancel... Perhaps call the airbnb help line and ask them to help you cancel rather than doing the cancellation online, then you can ask if they can refund your fees.
This is a problem of instant booking, both for the guests and the hosts -- no conversation occurs before booking. Do not do instant booking in the future. Airbnb isn't a less expensive hotel, it is a person to person experience and a cultural exchange, so you can't really find out about your host or the listing if all you do is click without a conversation.
Probably the host doesn't want to cancel because Airbnb penalized the hosts for canceling ... something that is not transparent to guests.
Good luck.
-- Lia -- Happy Hosting!