Isn't it more correct to say "houses like palace", not "palace like houses"? Why is this word order "palace like houses" used here?
"Palace-like houses" is used here to refer to the houses being like palaces. "Palace-like" should be hyphenated here. When a word is hyphenated next to "like", it is used to refer to that word being like the noun that follows. So in this case, the houses were "palace-like" or were like palaces. This format is relatively common, however, it is also correct to say "houses like palaces" instead.