Housing in urban areas has been a permanent problem since US construction in the Canal Zone brought a great influx of migrant laborers into Colón and Panama City. The government-established Bank of Urbanization and Rehabilitation began to build low-cost housing in 1944, and by 1950, it had built more than 1,500 units to house 8,000 people near Panama City. The Panamanian Institute of Housing estimated in 1970 that the national housing deficit of 76,000 units would increase by 7,700 units annually unless corrective measures were taken.
A 1973 housing law, designed to encourage low-income housing construction banned evictions, froze all rents for three years, and required banks to commit half their domestic reserves to loans in support of housing construction projects. By the early 1980s, however, the shortage of low-income housing remained acute, particularly in Colón. A construction boom in the early 1980s was mainly confined to infrastructural projects and office space.
In 2000, there were 793,732 dwellings units nationwide with an average of 3.6 people per dwelling. Though most homes are made of brick, stone, or conrete blocks, about 4% of the total housing stock was made of straw and thatch.