Birds are instinctive. This determines what they will use for a nest and what features are necessary. Goldfinch, robins, and mockingbirds prefer to nest on shrubs or on the branches of trees. Their nests are generally round like a cup. Towhees, pheasants, and sparrows prefer ground nests, and kingfishers prefer nests underground. Woodpeckers, chickadees, flickers, titmice, wrens, house finch, and bluebirds prefer nests in tree cavities, barn lofts, building crannies, and birdhouses.
Location is important. Chickadees, nuthatches, and woodpeckers prefer wooded areas, while bluebirds and swallows prefer open areas. To attract birds that prefer to be near woods, place the birdhouse near bushes. These birds like to perch and look around before entering the birdhouse. Position the house away from wind, preferably facing the south or east. Entrance holes are the next concern. Birds need a hole large enough to pass through, but it must be small enough to keep out predators. Chickadees prefer a diameter of 1 1/8 inches. Nuthatches, downy woodpeckers, and titmice prefer a diameter of 1 1/4 inches. Wrens are not fussy. They like a diameter from 1 to 1 1/2 inches. The house finch likes a 2-inch diameter hole.
Birds need a good depth for their nests. There should be three to four inches from the entrance hole to the nest, so babies cannot escape and predators can't reach them. Birds also like a particular size birdhouse. If the house is small, they tend to lay fewer eggs. If it is too large, they have difficulty filling up the area for the nest. A local garden center should have a chart of birdhouse dimensions for each kind of bird.
With the encouragement of do-it-yourself projects seen on TV and at big box hardware stores, there is a tendency to paint birdhouses bright colors. Birds prefer muted colors that blend into nature. The exception is the purple martin, which tends to like white birdhouses. Birds require a territory size. Tree swallows do not defend large areas. Chickadees need a large territory for breeding. Wrens and house finches are not afraid of humans, so birdhouses attached to the home or near the home are fine. Early spring is the best time of year to erect a birdhouse. Late winter is fine, too. Birds will explore the area looking for the best nesting possibility, but nesting will not occur until spring.