VS Code shows red squiggles under "stdio.h" when workspace is in ~/src but not /tmp

Visual Studio Code shows red squiggles under #include <stdio.h> in the editor when the workspace is in ~/src but not when it is in /tmp. Both workspaces compile and run the code fine. It's only an error in the editor.

I can reproduce this with a very simple Hello World C workspace. I am using CMake along with CMake Tools. Versions:

• macOS Catalina 10.15.7
• CMake 3.19.5
• Visual Studio Code 1.53.2
• C/C++ Extension 1.2.1
• CMake Tools Extension 1.6.0

Here's the directory structure:

% tree hello_world
hello_world
├── CMakeLists.txt
└── main.c

Here's CMakeLists.txt:

cmake_minimum_required(VERSION 3.0.0)
project(hello_world VERSION 1.0.0)

add_executable(hello_world main.c)

Here's main.c:

#include <stdio.h>

int main(int argc, char** argv)
{
    printf("hello world\n");
    return 0;
}

Here's the screenshot for ~/src:

And here's the screenshot for /tmp:

Edit: Posted the output of "C/C++: Log Diagnostics" for both workspaces on a Gist. Here's part of the diff:

     Includes:
-        /usr/local/include
         /Applications/Xcode.app/Contents/Developer/Toolchains/XcodeDefault.xctoolchain/usr/lib/clang/12.0.0/include
-        /Library/Developer/CommandLineTools/SDKs/MacOSX10.15.sdk/usr/include
         /Applications/Xcode.app/Contents/Developer/Toolchains/XcodeDefault.xctoolchain/usr/include
-    Frameworks:
-        /Library/Developer/CommandLineTools/SDKs/MacOSX10.15.sdk/System/Library/Frameworks

So this explains why it cannot find it in one workspace, but not why the paths are different.