Chipboard Buildings is a good way to make an inexpensive Christmas village, and you can customize them how you want!these are the kinds of villages I'd use if I wanted to build them on the Christmas tree.
Mel Stampz: Wee Houses links: templates, tutorials, etc.) Great site for paper house patterns. Cutting, coloring, folding and decorating are all challenging skills but worth the work. Make a village for the rug and take home at end of year.
DIY Putz house #3 - midcentury modest ranch house - download the pattern