The permissions as you show them allow users in the group users and all other users (thus in fact all users) to see what files/directories are in the other ones home directory (because of the r permission) and also what their permissions, size, owner, group, timestamps are (because of the x permission). They can not change anything of this (including adding/removing files/directories) in the other ones home directory (because of the lack of w permission).
When a user does not want this for other users then those in his own group, (s)he can change this by removing the r and x permissions for e.g. others(the world:
chmod o-rx $HOME
Similar for group.
Not that in your case there is no practical difference between group and others because you have only two users both in the same group.
This is a responsibility of the users themselves. root can only set those permissions as a suggestion (e.g. at the creation of a home directory), but after that the user can change that any moment to what (s)he thinks (s)he needs.
Talking about what is “correct” is sheer nonsense in my opinion. The “user/group/others partition and their permissions” mechanism is there to be used to need.
Using the -R option on chmod is again something you may need or not. When you want to remove all r, x (and logicaly then also all w) options from all files starting from a directory (in this particular case your home directory) up to the last file in that part of the directory tree, then yes. But the question is: do you want this.
When a directory has permissions rwx------, only the owner can look/do anything in that directory (and further up), thus granting group/others permissions in files there is useless, thus removing group and others permissions from those files will not hurt anybody. OTOH having them on does not hurt either.
In those times when I was using Unix as a professional, I always removed the permissions from at least others (and often also for group) from my home directory. As an extra I did so for all files that belonged to me (mostly in my home directory tree of course). And I added
umask 027
or more resrtictive
umask 077
in my ~.profile to avoid new files to be created with those permission on where I wanted to have them off.
Nowadays only my wife and I have users on our systems (not in the group users btw) and I am less restrictive.
In short: every Unix/Linux user should have a good understanding about the user/group/other and permissions concept. The user should then design a policy on how to use them in a particular case (may be different for every system (or group of systems) where the user has a userid). And then implement that policy and keep to it.