Below are the steps you can follow to resolve the error.
Step2. In WHM, search the keyword “Tweak Settings” and go to “Tweak Settings” section – or your will find it under “Server Configuration” option check the subdomain options under the tweak setting.
Below couple of option should be on:
Allow users to park subdomains of the server’s hostname.
Allow resellers to create accounts with subdomains of the server’s hostname