Create a normal map inside Unreal 4?

The NormalFromHeight function is not doing a good job, you should rather rebuild it manually for better quality (same instrucion count btw):
://oliverm-h.blogspot.de/2013/09/udk-material-normals-from-height.html

This is not a good idea. The noise function already is pretty expensive. For generating normals you would have to calculate it at least 3 times.
That being said it’s totally possible by using the NormalsFromFunction material function: https://forums.unrealengine/showthread.php?8147-Ocean-shader-normal-issues!&p=71995&viewfull=1#post71995