Many birds will happily nest in an unpainted wood box, and decay-resistant woods, such as cedar, can withstand the elements just fine. Still, a good coat of paint can make a nice addition, as long as the birdhouse still appeals to birds as a natural, protected place to raise their young.
Just make sure you avoid common goofs like lead-based paint, so your good intentions don't end up putting your feathered guests at risk.
The Don't List
Avoid the three biggest mistakes people make when decorating birdhouses: Don't paint the inside or around the entrance, where birds are most likely to peck; they may ingest paint chips. Don't use wood stain or lead-based paints, which can be toxic to birds.
Also, don't paint the outside of the birdhouse a dark color -- it'll absorb heat and make life uncomfortable for the occupants.
Opt for earth-toned colors -- such as tan, gray or green -- which blend into your surroundings. Although they might not be eye-catching, these colors appeal to most bird species in search of a home, perhaps because they are less likely to attract the notice of predators.
There is one notable exception, however: purple martin houses may be painted white to keep the inside of the birdhouse cooler, according to Esther Lutz, master naturalist for University of Illinois Extension, in the article "Attracting Birds with Birdhouses".