The 21-year-old starred for Harriers last season after moving from Premier League side Huddersfield Town.
It's thought a deal would cost around £200,000 and it's believed initial talks have taken place over a move to Molineux.
However other clubs are thought to be interested in the youngster including Championship outfit Queens Park Rangers.
Horsfall initially joined Harriers on loan from Huddersfield at the start of last season before sealing a permanent move during the January transfer window.
He came through the ranks with the Terriers having first joined the club aged 11.
The 6ft 2in defender played 43 times in National League North last season, scoring four goals.
Wolves believe Horsfall can step up to league level although if a deal went through it's likely he would either be loaned out or feature for the Under-23s, who will be managed by Rob Edwards next season.
Wolves are thought to be keen to improve their Under-23 side, who are set to mirror Nuno Espirito Santo's first team with a 3-4-3 formation.
Meanwhile Wolves have sold out of season tickets for their return to the Premier League.
The final tickets were snapped up on Wednesday meaning Wolves have reached their cap of around 22,000.
They had shifted around 20,000 to existing season ticket holders who renewed their seats, with the rest dished out on a loyalty points basis.
The remaining 9,000 or so ticket per match will be taken up by away fans, corporate seats and general sale tickets.
Molineux's capacity will increase by 800 seats next season as the club are opening up the temporary Graham Hughes stand, in between the Sir Jack Hayward and Billy Wright stands, which had laid dormant for many years.