This is caused by a (I believe) non-default and incorrect configuration of the file $HOME/.config/user-dirs.dirs that some distributions are doing.
This issue was also discussed this thread and this thread, and has been reported in this bug report. As of Dolphin 24.08.02, there’s a workaround that will ignore the misconfiguration. I think it will then fallback to the original (and usually correct) default.
To fix the misconfiguration, you can go to System Settings → Session → Locations and under Templates folder set it to the Templates folder under your home (or wherever elsewhere you think it should be).