Pardon my terminology, but it seems as if seagrass cannot be placed beneath source blocks (as they are flowing I imagine).
I make water areas by filling the top and removing the filler blocks to have the water travel downward. This does not work well with underwater blocks.
Environment
Win 10 (64-bit, build 1709), 1366x768, AMD FX-9590 (4.1Ghz), GTX 1060 (6Gb), 8Gb DDR3 (x2 4Gbs, 1900MHz), Minecraft for Windows.
Sea grass needs to be placed in water source blocks.