Yes, it is possible that the string could be UTF-8; however, the value of $HOME must then be a valid UTF-8 string and the string will only contain complete valid UTF-8 characters. Note that UTF-8 simply uses most (but not all; it omits 0xC0, 0xC1, 0xF5..0xFF) of the possible 8-bit chararacter values. That means you don't have to worry very much about it unless you want to. In particular, UTF-8 only uses a zero byte to indicate U+0000, which is equivalent to ASCII NUL or '\0'
and is encoded in a single byte (value 0).
The conclusion doesn't vary across platforms; different systems may make it more or less difficult to create home directories that need non-ASCII UTF-8 characters.
See also: SO 164430