This was something from last chapter too, but the word "homely" means unattractive and unappealing. I think you are meaning the word "homey" which is a feeling of home or being cozy and comfortable. Its really baffling to me tossing a "L" into the word makes it immediately be a bad thing to what you are describing.
It can technically mean both at once, the reason it's considered an insult is it's basically calling someone plain or unremarkable.
(From dictionary.cambridge.org)
"UK. (US homey) plain or ordinary, but pleasant: The hotel was homely and comfortable."
UK is seems to apply more so to environments, but commonly for USA usage it can be applied to people as a low key but really horribly mean insult.
(I'm totaaally not holding a grudge against a character in another series for doing this to the MC....no but like I am. I'm holding a big grudge. He involved her in an affair w/o her knowledge and then called her homey and like WHITE RICE after publicly humiliating her and I hope for karma for the damn jerk in story).
But yeah, tl;Dr: both uses are correct depending on context.