Yes, The seller can deny an offer for any reason and doesn't have to give an explanation as to why...that's just the way it works. There are extensive Fair Housing Laws, but like any law you'd have to PROVE that you were being discriminated against, which could be a long, expensive and ultimately unsatisfiying resolution for you.
Imagine a Realtor was selling YOUR home for you, and someone made an offer, and for whatever reason you did not want to accept it. Can you imagine how you would feel if your Realtor or the US Government then MADE you sell your property, or FORCED you to provide a reason to the buyer (that was to the buyers satisfaction)? Having been a Realtor for 24 years, I've never seen a single case where any party to the transaction was made to buy or sell against their will. Your case is kind of like dating- who knows why someone won't go out with someone else? Rather than trying to figure it out, it is best just to move on to another.