Abstract: With the rapid socio-economic transformation and development, although the housing conditions of farmers have been improved, the differences in housing allocation have also been sustained and strengthened, which has led to a series of social problems. This paper uses the questionnaire survey data of 813 households live in the urban and suburban villages of Wuhan city. The T-test, the Gini coefficient and Thiel index were used to measure and compare the housing differentiation between urban villages and suburbs. On this basis, the nonlinear Blinder-Oaxaca regression decomposition method was applied to analyze the contribution of capital endowment and location conditions to the differentiation of housing allocation between urban and suburb villages. The results were as follows: at first, under the same level of capital endowment, there are significant differences between housing allocation in urban and suburban villages. Second, the difference in housing area allocation of farmers in urban villages is greater than that of suburban villages, while the housing conditions are opposite. Furthermore, the differentiation of the housing area between the two regions is mainly determined by the difference in capital endowment (58.62%), while the differentiation of housing conditions is mainly derived from the location conditions difference (57.77%). In conclusion, it is suggested that the authorities should pay attention to the improvement of the living conditions of vulnerable groups and the accumulation of farmers capital endowment, guide farmers to build reasonable and appreciate housing, strengthen the construction of suburban public infrastructure and housing facilities, and promotes the construction and management of central villages by village planning. Altogether contributes to improve farmers housing conditions and guarantee the harmonious development of society.