The answer may actually depend on the OS you are using but I agree with John that this actually requires 2 separate directives...
On a Red Hat system...
# cat /etc/default/useradd
# useradd defaults file
GROUP=100
HOME=/home
INACTIVE=-1
EXPIRE=
SHELL=/bin/bash
SKEL=/etc/skel
CREATE_MAIL_SPOOL=yes
the /home/$USER would have 755 permissions by default though you could use puppet to ensure that if a $USER changes his $HOME directory permissions, they are changed back.
Likewise, you could set /home to 750 permissions to ensure that any changes are overridden. Obviously if you set /home to 750 permissions, then the 'group' would have to be set to a group that all users belong to so there's something lacking in the question (i.e. 'users' on a Red Hat system).