One of the most heavily shorted industries is the residential construction industry, thanks to the subprime-mortgage debacle, rising interest rates, overspeculation and a surplus of inventory for sale.

The short-sellers are hoping for a continued drop in the price of homebuilder stocks, but any sudden positive news, such as an interest-rate cut by the Federal Reserve, or even a rumor of one, could send the price of the stocks higher as short-sellers are forced to cover their positions.

For this reason, at Stockpickr we have put together the Short-Squeeze Housing Stocks, a list of heavily shorted names in the sector.

The second most shorted homebuilder is Brookfield Homes ( BHS), with a short ratio of 26 and more than 21% of the float sold short. The Virginia-based company specializes in luxury single-family and multifamily construction. The stock has a trailing price-to-earnings ratio of 5, but the company's revenue has dropped by more than 24% year over year.

The stock appears on Barron's Insider Purchases 6-25-07, making this list after CEO Ian Cockwell last month purchased 133,800 shares, or about $4 million worth of stock. This portfolio also lists a couple of other stocks with high short ratios, Ligand Pharmaceuticals ( LGND), with a short ratio of 15.8, and Terremark Worldwide ( TMRK), with a short ratio of 23.

Brookfield also appears in Insider Purchases and Buybacks X, a recent Stockpickr portfolio that also features Steelcase ( SCS), which has a short ratio of 17.

Want more? Check out TheStreet.com TV video. Gregg Greenberg discusses some heavily shorted homebuilder stocks that could be squeezed higher.

If you liked this article you might like

This Week's 'Barron's' Roundup

This Week's 'Barron's' Roundup

This Week's 'Barron's' Roundup

This Week's 'Barron's' Roundup

This Week's 'Barron's' Roundup

This Week's 'Barron's' Roundup

This Week's 'Barron's' Roundup

This Week's 'Barron's' Roundup

This Week's 'Barron's' Roundup

This Week's 'Barron's' Roundup