As U.S. housing data continue to disappoint, two major home builders are facing big short positions ahead of earnings announcements.
KB Home, which reports on Tuesday, is the most shorted North America-listed stock announcing earnings this week, according to analysis from Markit Research. Another home builder, Lennar, is the sixth-most shorted stock on this week's list.
About 15.8 percent of KB Home shares outstanding are on loan, although that figure has shrunk in recent months, according to Markit. The bets against the home builders are based on a recent string of tepid U.S. housing figures, including when new home sales unexpectedly fell in November, according to Markit analyst Relte Stephen Schutte.
Read MoreWhat to expect from housing in 2015
KB Home has an average analyst rating of "hold," with an average price target of $16.71, according to FactSet. The stock traded at about $16.70 on Monday afternoon.
Another factor weighing on the home builders is the massive fall in oil prices. Several parts of the country have seen recent economic growth tied to oil production, so home builders with exposure to those places "could come under pressure," Schutte said in a note explaining the bear case for the stocks.
Although the short-sellers may doubt the home builders, others on Wall Street see opportunities for growth. MKM Partners analyst Megan McGrath wrote in a recent note that her thesis is "be long but be watchful."
While maintaining a "buy" rating on KB Home, and noting that the home builders have seen strong positive reactions to any good news in the housing market, McGrath did caution that "any strength in builder shares could prove temporary if recent credit announcements do not translate into demand once the spring selling season arrives."
Here are the top 10 most shorted stocks announcing earnings this week: