Yes. It is entirely possible to gain muscle on a deficit. The process is called "body recomposition" or "recomping". The difficulty in doing so depends on experience, bodyfat percentage, training intensity, training adherence, macronutrient adherence, and the size of the deficit.
A person just starting out with 25% bodyfat may be able to build muscle working out 3 days a week, lifting moderately, eating at a 500 calorie deficit, and only tracking protein. A person with 5 years experience at 15% bodyfat may be able to build muscle if they work out 5 days a week, lifting heavy, eating at a 150 calorie deficit, and meticulously tracking every macronutrient. A pro athlete at 10% bodyfat will probably not gain any muscle in a deficit no matter what they do.
In your case, it sounds like you're making progress with what you're doing. You shouldn't change anything until you stop.
If your workouts start feeling exhausting even after a deload and you're losing progress, then your calories are too low and you need to increase them a bit. Otherwise you won't be able to continue to train at the intensity you need to build muscle.
If your workouts aren't exhausting but you're not making progress, then you need to increase the difficulty of your workouts. This can be either through more weight, more reps, more sets, harder exercises, different exercises, etc.
If your workouts aren't exhausting but you're regressing, then you're probably both working out too hard and eating at too much of a deficit. Lower the workouts and build back up. Increase the calories slightly to help.