Was Jesus born in a cave or stable?

It is entirely possible that Jesus was born in a cave that was used as a stable. The hills of Judea are a soft stone, making for both natural caves and artificial ones. Houses would be built adjacent with the cave providing additional space, as well as warmth in winter and coolness in summer.

His being born in a cave truly speaks to the poverty that Jesus willingly entered. In his Midnight Mass homily in 1978, St. John Paul II said,

In order to have a complete picture of the reality of that event, in order to penetrate more deeply still into the realism of that moment and the realism of human hearts, let us remember that the event occurred precisely in the way it did: in abandonment and extreme poverty, in the cave stable outside the town, because people in the town refused to receive the Mother and Joseph into any of their homes. Nowhere was there room. From the beginning, the world showed itself inhospitable towards the God who was to be born as Man.

Why was Jesus born in a stable?

In a temporal sense, there was no room for St. Joseph and the Blessed Virgin at the inn. On a deeper level, however, Jesus’ humble birth highlights the fact that He sacrificed a great deal in order to become Man. Philippians 2:5-7 says,

Have this mind among yourselves, which was in Christ Jesus, who, though he was in the form of God, did not count equality with God a thing to be grasped, but emptied himself, taking the form of a servant, being born in the likeness of men.