It's not reproducible with vdsm 4.16.26 from ovirt 3.5 repo while is happening with 4.16.27-5.git49ce7d7.el7 @ovirt-3.5-snapshot
Verified on: ovirt-hosted-engine-ha-1.2.7.2-1.el7ev.noarch ovirt-hosted-engine-setup-1.2.6.1-1.el7ev.noarch vdsm-4.16.27-1.el7ev.x86_64 Deployment of second host pass without any errors.
oVirt 3.5.5 has been released including fixes for this issue.