Well answer of your question is yes,people do live inside igloo.igloo is made up of snow and the air pockets or, air bubbles inside a snow brick/snow act as good insulator.it works just like a woolen sweater (the air bubbles of a sweater keep us warm in cold temperature).
temperature of outside remains -45℃ but inside a igloo it remains between -5℃ to 6/7℃ and the external temperature keeps the igloo steady.