UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                   Form 10-QSB

(Mark One)
[X]   QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
      ACT OF 1934

                For the quarterly period ended June 30, 2004


[ ]   TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT


            For the transition period from _________to _________

                         Commission file number 0-14458


                NATIONAL  HOUSING  PARTNERSHIP  REALTY  FUND TWO
       (Exact name of small business issuer as specified in its charter)


           Maryland                                               52-1365317
(State or other jurisdiction of                                (I.R.S. Employer
 incorporation or organization)                              Identification No.)

                         55 Beattie Place, P.O. Box 1089
                        Greenville, South Carolina 29601
                    (Address of principal executive offices)

                                 (864) 239-1000
                           (Issuer's telephone number)


Check  whether the issuer (i) filed all reports  required to be filed by Section
13 or 15(d) of the  Exchange  Act during the past 12 months (or for such shorter
period that the  registrant  was required to file such reports) and (2) has been
subject to such filing requirements for the past 90 days.
Yes  X   No ___


<PAGE>



                         PART I - FINANCIAL INFORMATION


ITEM 1.     FINANCIAL STATEMENTS


                NATIONAL HOUSING PARTNERSHIP REALTY FUND TWO
                                  Balance Sheet
                                   (Unaudited)
                        (in thousands, except unit data)

                                  June 30, 2004


ASSETS
   Cash and cash equivalents                                               $ 26
   Receivables - limited partners                                           202
   Investments in and advances to Local Limited
      Partnerships (Note 2)                                                  --

                                                                          $ 228
LIABILITIES AND PARTNERS' CAPITAL (DEFICIENCY)

Liabilities
   Accrued expenses                                                       $  15
   Administrative and reporting fees payable to
      General Partner (Note 3)                                              443

Partners' capital (deficiency)
   General Partner -- The National Housing
      Partnership (NHP)                                       $ 640
   Original Limited Partner -- 1133 Fifteenth
      Street Two Associates                                     (170)
   Other Limited Partners -- 17,723 investment
      units                                                     (700)      (230)

                                                                          $ 228

               See Accompanying Notes to Financial Statements

<PAGE>

                NATIONAL HOUSING PARTNERSHIP REALTY FUND TWO
                            Statements of Operations
                                   (Unaudited)
                      (in thousands, except per unit data)
<TABLE>
<CAPTION>

                                                  Three Months Ended       Six Months Ended
                                                       June 30,                June 30,
                                                   2004         2003       2004        2003
REVENUES:
<S>     <C>    <C>    <C>    <C>    <C>    <C>
  Share of profits from Local Limited
    Partnerships (Note 2)                          $ --         $ 32       $ --       $ 1,238
  Interest received on advances to Local
    Limited Partnerships (Note 2)                      --          --          --          68
                                                       --          32          --       1,306
COSTS AND EXPENSES:
  Administrative and reporting fees to
    General Partner (Note 3)                            3           3           6           7
  Other operating expenses                             15          39          23          54
                                                       18          42          29          61

(Loss) income from partnership operations             (18)        (10)        (29)      1,245
Distributions in excess of investment in
  Local Limited Partnerships (Note 2)                  --           3           1           3

NET (LOSS) INCOME                                  $ (18)       $ (7)      $ (28)     $ 1,248

ALLOCATION OF NET (LOSS) INCOME:
  General Partner - NHP                            $ --         $ --       $ --        $ 13
  Original Limited Partner - 1133 Fifteenth
    Street Two Associates                              --          --          --          13
  Other limited partners                              (18)         (7)        (28)      1,222

                                                   $ (18)       $ (7)      $ (28)     $ 1,248

NET (LOSS) INCOME PER OTHER LIMITED
  PARTNERSHIP INTEREST                            $ (1.02)    $ (0.39)   $ (1.58)    $ 67.73


               See Accompanying Notes to Financial Statements
</TABLE>

<PAGE>

                NATIONAL HOUSING PARTNERSHIP REALTY FUND TWO
           Statement of Changes in Partners' Capital (Deficiency)
                                   (Unaudited)
                        (in thousands, except unit data)

<TABLE>
<CAPTION>

                                   The National      1133
                                      Housing     Fifteenth       Other
                                    Partnership   Street Two     Limited
                                       (NHP)      Associates    Partners        Total

Partners' capital (deficiency)
<S>           <C> <C>                  <C>          <C>          <C>           <C>
  at December 31, 2003                 $ 640        $ (170)      $ (672)       $ (202)

Net loss - six months ended
  June 30, 2004                            --           --           (28)          (28)

Partners' capital (deficiency)
  at June 30, 2004                     $ 640        $ (170)      $ (700)       $ (230)

Percentage interest at
  June 30, 2004                           1%           1%           98%         100%
                                          (A)          (B)           (C)

(A)   General Partner

(B)   Original Limited Partner

(C)   Consists of 17,723 investment units at June 30, 2004 and December 31, 2003
      (see "Note 4" in Notes to Financial  Statements;  "Abandonment  of Limited
      Partnership Units).
</TABLE>

               See Accompanying Notes to Financial Statements

<PAGE>

                NATIONAL HOUSING PARTNERSHIP REALTY FUND TWO
                            Statements of Cash Flows
                                   (Unaudited)
                                 (in thousands)
<TABLE>
<CAPTION>

                                                                       Six Months Ended
                                                                           June 30,
                                                                      2004           2003
CASH FLOWS FROM OPERATING ACTIVITIES:
<S>                                                                   <C>            <C>
  Interest received on advances to Local Limited Partnerships         $ --           $ 68
  Payment of administrative and reporting fees                           --           (933)
  Payment of non-resident income tax withholding to the
   states of Colorado and North Carolina on behalf of
   limited partners                                                     (27)          (204)
  Reimbursement by limited partners of non-resident income
   tax withholding paid by the Partnership to the state of
   North Carolina on behalf of limited partners                           7             --
  Operating expenses paid                                                (8)           (85)
  Payment of interest on advances payable to General Partner             --             (1)
        Net cash used in operating activities                           (28)        (1,155)

CASH FLOWS FROM INVESTING ACTIVITIES:
  Distributions from Local Limited Partnerships                           1          1,108
  Repayment of advances to Local Limited Partnership                     --            133
        Net cash provided by investing activities                         1          1,241

CASH FLOWS FROM FINANCING ACTIVITIES:
  Repayment of advances from General Partner                             --            (73)
  Proceeds from advances from General Partner                            --             60
        Net cash used in financing activities                            --            (13)

NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS                    (27)            73

CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD                         53             --

CASH AND CASH EQUIVALENTS AT END OF PERIOD                            $ 26           $ 73

RECONCILIATION OF NET (LOSS) INCOME TO NET CASH USED IN
  OPERATING ACTIVITIES:
   Net (loss) income                                                 $ (28)        $ 1,248
   Adjustments to reconcile net (loss) income to net cash
     used in operating activities:
      Share of profits from Local Limited Partnerships                   --         (1,238)
      Distributions in excess of investment in Local Limited
        Partnerships                                                     (1)            (3)
      Changes in operating assets and liabilities:
        Decrease in accrued interest on advances from
          General Partner                                                --             (1)
        Increase (decrease) in administrative and reporting
           fees payable                                                   6           (926)
        Increase in receivables - limited partners                      (20)          (204)
        Increase (decrease) in other accrued expenses                    15            (31)
        Total adjustments                                                --         (2,403)

Net cash used in operating activities                                $ (28)        $(1,155)

               See Accompanying Notes to Financial Statements
</TABLE>

<PAGE>

                  NATIONAL HOUSING PARTNERSHIP REALTY FUND TWO
                          Notes to Financial Statements
                                   (Unaudited)


(1) ACCOUNTING POLICIES

Organization

National  Housing   Partnership  Realty  Fund  Two  (the  "Partnership"  or  the
"Registrant")  is a limited  partnership  organized  under the Maryland  Revised
Uniform Limited  Partnership Act on January 22, 1985. The Partnership was formed
for the purpose of raising capital by offering and selling  limited  partnership
interests  and  then   investing  in  limited   partnerships   ("Local   Limited
Partnerships"),  each of which owns and  operates  an  existing  rental  housing
project  which is  financed  and/or  operated  with one or more  forms of rental
assistance or financial assistance from the U.S. Department of Housing and Urban
Development  ("HUD").  On April 30, 1985, the Partnership  began raising capital
and acquiring interests in Local Limited Partnerships.

The National Housing  Partnership,  a District of Columbia  limited  partnership
("NHP" or the  "General  Partner"),  was  authorized  to raise  capital  for the
Partnership by offering and selling to additional limited partners not more than
18,300  interests  at a price of  $1,000  per  unit.  During  1985,  the sale of
interests  was closed after the sale of 18,300  interests  to limited  partners.
Apartment  Investment  and  Management  Company  ("AIMCO")  and  its  affiliates
ultimately  control the General  Partner.  The original  Limited  Partner of the
Partnership is 1133 Fifteenth Street Two Associates, whose limited partners were
key  employees  of the general  partner of NHP at the time the  Partnership  was
formed. The general partner of 1133 Fifteenth Street Two Associates is NHP.

Basis of Presentation

The accompanying  unaudited interim financial statements reflect all adjustments
which are, in the opinion of management,  necessary for a fair  presentation  of
the  financial  condition  and results of  operations  for the  interim  periods
presented.  All such adjustments are of a normal and recurring nature. Operating
results  for the  three  and six  month  periods  ended  June  30,  2004 are not
necessarily  indicative  of the results that may be expected for the year ending
December 31,  2004.  While the General  Partner  believes  that the  disclosures
presented are adequate to make the information  not misleading,  it is suggested
that  these  financial  statements  be read in  conjunction  with the  financial
statements and notes included in the  Partnership's  Annual Report filed on Form
10-KSB for the year ended December 31, 2003.

Recent Accounting Pronouncements

In January 2003 and revised in December 2003, the Financial Accounting Standards
Board  ("FASB")  issued  Interpretation  No.  46 ("FIN  46"),  Consolidation  of
Variable  Interest  Entities.  FIN 46 requires the  consolidation of entities in
which an enterprise absorbs a majority of the entity's expected losses, receives
a majority of the entity's expected  residual  returns,  or both, as a result of
ownership,  contractual or other financial interests in the entity. Prior to the
issuance of FIN 46,  entities were generally  consolidated by an enterprise when
it had a controlling  financial  interest through ownership of a majority voting
interest in the entity. FIN 46 applied immediately to variable interest entities
created  after  January 31, 2003,  and with respect to variable  interests  held
before  February 1, 2003, FIN 46 will apply to financial  statements for periods
ending after December 15, 2004.

The Partnership has not entered into any partnership  investments  subsequent to
January  31,  2003.  The  Partnership  is  in  the  process  of  evaluating  its
investments in unconsolidated  partnerships that may be deemed variable interest
entities under the provisions of FIN 46. The  Partnership has not yet determined
the anticipated  impact of adopting FIN 46 for its  partnership  agreements that
existed as of December 31, 2003.  However,  FIN 46 may require the consolidation
of the  assets,  liabilities  and  operations  of certain  of the  Partnership's
unconsolidated  partnership  investments.  Although  the  Partnership  does  not
believe  the full  adoption  of FIN 46 will  have an impact  on cash  flow,  the
Partnership cannot make any definitive  conclusion on the impact on net earnings
until it completes its evaluation,  including an evaluation of the Partnership's
maximum exposure to loss.

(2) INVESTMENTS IN AND ADVANCES TO LOCAL LIMITED PARTNERSHIPS

During 1985, the Partnership  acquired a 94.5% limited partnership interest (98%
with respect to allocation of losses) in twenty-one Local Limited  Partnerships.
At June 30,  2004,  the  Partnership  continues to hold an interest in two Local
Limited  Partnerships:  San Juan del Centro Limited Partnership and Harold House
Limited  Partnership.  On February 13, 2003,  Caroline Arms Limited  Partnership
sold its  investment  property to an  unaffiliated  third party for  $4,600,000.
After paying the closing costs, the net proceeds were used to repay the mortgage
encumbering  the property  along with other  liabilities of the property and the
Local Limited Partnership. In accordance with an agreement reached with the note
holder of the deferred  acquisition note, 60% or approximately  $1,663,000 as of
June 30,  2003 and  approximately  $1,670,000  as of  December  31,  2003 of the
remainder was paid against the  principal of this note and 40% or  approximately
$1,108,000 as of June 30, 2003 and  approximately  $1,113,000 as of December 31,
2003 was distributed to the Partnership.  An additional  $198,000 as of June 30,
2003 and December 31, 2003 was received by the  Partnership for the repayment of
advances and accrued  interest to Caroline  Arms Limited  Partnership  which had
previously  been deemed  unlikely  to be  collected.  The funds  received by the
Partnership  were used to pay  certain  of its  liabilities,  including  accrued
administrative  and reporting  fees due to an affiliate of the General  Partner.
The  Local  Limited  Partnership  recognized  a gain on  sale  of  approximately
$262,000,  a gain on forgiveness of debt of approximately  $2,728,000 and a loss
from discontinued  operations of approximately  $25,000 for the six months ended
June 30, 2003. As of December 31, 2003, the Local Limited  Partnership  had been
completely liquidated.

Harold  House and San Juan Del  Centro  Limited  Partnerships  both  have  notes
payable  which are  currently  in default  and  accordingly,  the Local  Limited
Partnership  interests  are subject to  foreclosure.  Continuation  of the Local
Limited  Partnerships'  operations  in the present  form is  dependent  on their
ability to extend the  maturity  date of the  respective  notes,  or to repay or
refinance their respective  notes.  The financial  statements do not include any
adjustments which might result from the outcome of these uncertainties.

Since the Partnership,  as a limited partner, does not exercise control over the
activities of the Local Limited  Partnerships in accordance with the partnership
agreements,  these investments are accounted for using the equity method.  Thus,
the  investments are carried at cost less the  Partnership's  share of the Local
Limited  Partnerships'  losses and distributions plus the Partnership's share of
Local Limited  Partnerships'  profits.  However,  since the  Partnership  is not
legally liable for the obligations of the Local Limited Partnerships, and is not
otherwise committed to provide additional support to them, it does not recognize
losses once its investment in each of the individual Local Limited  Partnerships
reduced for its share of losses and cash  distributions,  reaches zero.  Once an
investment account has been reduced to zero, profits reported by a Local Limited
Partnership  are not  recognized  by the  Partnership  until such profits  equal
losses not recognized plus distributions  received and previously  recognized as
revenue.  As a result, the Partnership did not recognize  approximately  $58,000
and $47,000 of losses from two Local Limited  Partnerships during the six months
ended June 30, 2004 and 2003, respectively. During the six months ended June 30,
2004,  there were no profits offset  against prior years' losses not taken.  For
the six months  ended June 30,  2003,  the  Partnership's  share of profits from
Caroline Arms Limited  Partnership was  approximately  $2,799,000 offset against
prior years' losses not taken of approximately  $1,561,000. As of June 30, 2004,
the  Partnership  has not recognized  approximately  $1,880,000 of its allocated
cumulative  share of losses  from two Local  Limited  Partnerships  in which its
investment has been reduced to zero.

Advances made by the  Partnership to the individual  Local Limited  Partnerships
are  considered   part  of  the   Partnership's   investment  in  Local  Limited
Partnerships.  When advances are made,  they are charged to operations as a loss
on investment in the Local Limited  Partnership  using  previously  unrecognized
cumulative  losses.  To the extent that advances are repaid by the Local Limited
Partnerships in the future, the repayments will be credited as distributions and
repayments  in  excess  of  investment  in  Local  Limited   Partnerships.   The
Partnership did not advance any funds to the Local Limited  Partnerships  during
the six months ended June 30, 2004 and 2003.

During  the six months  ended  June 30,  2003,  Caroline  Arms and Harold  House
Limited Partnerships repaid approximately $198,000 and $3,000, respectively,  to
the  Partnership  in repayment of advances  and accrued  interest  deemed by the
Partnership as unlikely to be collected and treated as an additional  investment
in the Local Limited Partnerships.  The amounts repaid included accrued interest
of approximately $68,000 and less than $1,000,  respectively.  The remaining two
Local Limited  Partnerships  do not have any advances owed to the Partnership at
June 30, 2004.

The following are unaudited combined  statements of operations for the three and
six months  ended June 30, 2004 and 2003 of the Local  Limited  Partnerships  in
which the Partnership  has invested.  The statements are compiled from financial
statements of the Local Limited  Partnerships  which are prepared on the accrual
basis of accounting and supplied by the managing agents of the projects.
<TABLE>
<CAPTION>

                        COMBINED STATEMENTS OF OPERATIONS

                                         Three Months Ended           Six Months Ended
                                              June 30,                    June 30,
                                         2004          2003          2004          2003
                                                         (in thousands)
<S>                                      <C>           <C>           <C>          <C>
Rental income                            $ 343         $ 338         $ 679        $ 658
Other income                                 64            64           127          141
   Total income                             407           402           806          799

Operating expenses                          213           157           430          397
Interest, taxes, and insurance              101           124           212          242
Depreciation                                113           106           223          209
   Total expenses                           427           387           865          848

Net (loss) income before
  discontinued operations                   (20)           15           (59)         (49)
Income (loss) from discontinued              --             2            --          (25)
  operations
Gain on sale of discontinued
  operations                                 --            60            --          262
 (Loss) gain on forgiveness of
  debt of discontinued operations            --           (26)           --        2,728
Net (loss) income                        $ (20)        $ 51          $ (59)      $ 2,916

National Housing Partnership
  Realty Fund Two share of income
    (loss)                               $ (20)        $ 47          $ (58)      $ 2,752
</TABLE>

(3) TRANSACTIONS WITH THE GENERAL PARTNER

During the six month  periods  ended  June 30,  2004 and 2003,  the  Partnership
accrued  administrative and reporting fees payable to the General Partner in the
amount of approximately $6,000 and $7,000,  respectively,  for services provided
to the  Partnership.  The  amount  of fees  due to the  General  Partner  by the
Partnership  was  approximately  $443,000 at June 30, 2004.  If paid at all, the
accrued administrative and reporting fees payable to the General Partner will be
paid as cash flow permits or from the sale or  refinancing of one or more of the
underlying properties of the Local Limited Partnerships.  Approximately $933,000
of  administrative  and reporting fees was paid during the six months ended June
30,  2003  from  the  distribution  received  from the  proceeds  of the sale of
Caroline Arms Limited  Partnership's  investment property. No payments were made
during the six months ended June 30, 2004.

The General Partner  advanced the Partnership  approximately  $60,000 during the
six months ended June 30, 2003.  There were no advances from the General Partner
during the six months ended June 30, 2004.  During the six months ended June 30,
2003,  the  Partnership  repaid  advances of  approximately  $73,000 and accrued
interest of approximately $1,000 to the General Partner.  Interest is charged on
borrowings  at the JP Morgan Chase prime  interest  rate plus 2% and amounted to
less than $1,000 for the six months ended June 30, 2003.  There were no advances
or accrued interest owed to the General Partner at June 30, 2004.

(4) ABANDONMENT OF LIMITED PARTNERSHIP UNITS

During the six  months  ended  June 30,  2003 the number of limited  partnership
units decreased by 320 units due to limited partners  abandoning their units. In
abandoning  his  or  her  Limited   Partnership   Unit(s),   a  limited  partner
relinquishes all right, title, and interest in the partnership as of the date of
abandonment.  However,  the limited partner is allocated his or her share of net
income or loss for that year.  The income or loss per other limited  partnership
unit in the  accompanying  statements of  operations is calculated  based on the
number of units  outstanding  at the  beginning of the year or 17,723 and 18,043
units for 2004 and 2003, respectively.

(5)   CONTINGENCIES

The  Partnership  is unaware of any pending or  outstanding  litigation  matters
involving  it or the  underlying  investment  properties  of the  Local  Limited
Partnerships in which the  Partnership  invests that are not of a routine nature
arising in the ordinary course of business.

As  previously  disclosed,  the  Central  Regional  Office of the United  States
Securities and Exchange  Commission is conducting an  investigation  relating to
certain  matters.  AIMCO  believes the areas of  investigation  include  AIMCO's
miscalculated   monthly  net  rental  income  figures  in  third  quarter  2003,
forecasted  guidance,  accounts payable,  rent concessions,  vendor rebates, and
capitalization of expenses and payroll.  AIMCO is cooperating  fully. AIMCO does
not believe that the ultimate outcome will have a material adverse effect on its
consolidated  financial  condition  or results of  operations  taken as a whole.
Similarly,  the General Partner does not believe that the ultimate  outcome will
have a material  adverse  effect on the  Partnership's  financial  condition  or
results of operations taken as a whole.

(6) GOING CONCERN

Both of the remaining two Local Limited Partnership's notes payable are past due
(see Note 2).  Continuation  of the Local  Limited  Partnerships'  operations in
their  present form is dependent on their  ability to extend the maturity  date,
repay or refinance these notes.  These conditions raise  substantial doubt about
their  and  the  Partnership's  ability  to  continue  as a going  concern.  The
financial  statements do not include any adjustments which might result from the
outcome of these uncertainties.

ITEM 2.     MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION

The matters discussed in this report contain certain forward-looking statements,
including, without limitation, statements regarding future financial performance
and the effect of government  regulations.  Actual results may differ materially
from those described in the forward-looking statements and will be affected by a
variety of risks and factors including,  without limitation:  national and local
economic  conditions;  the terms of  governmental  regulations  that  affect the
Registrant and interpretations of those regulations; the competitive environment
in which the Registrant operates;  financing risks, including the risk that cash
flows from operations may be insufficient to meet required payments of principal
and interest;  real estate risks, including variations of real estate values and
the general  economic  climate in local markets and  competition  for tenants in
such markets;  litigation,  including  costs  associated  with  prosecuting  and
defending  claims  and  any  adverse   outcomes,   and  possible   environmental
liabilities.   Readers  should  carefully  review  the  Registrant's   financial
statements and the notes thereto,  as well as the risk factors  described in the
documents  the  Registrant  files  from  time to time  with the  Securities  and
Exchange Commission.

This item should be read in conjunction with the financial  statements and other
items contained elsewhere in this report.

Liquidity and Capital Resources

As of June 30, 2004, the Partnership retained an interest in two of its original
twenty-one Local Limited Partnerships. The properties in which the Local Limited
Partnerships  have  invested  receive one or more forms of  assistance  from the
Federal  Government.  As a result,  the Local Limited  Partnerships'  ability to
transfer funds either to the Partnership or among themselves in the form of cash
distributions,   loans,   or  advances   is   generally   restricted   by  these
government-assistance    programs.   These   restrictions   could   impact   the
Partnership's  ability  to meet  its cash  obligations  given  the low  level of
reserves at the Partnership level. The General Partner monitors  developments in
the area of legal and regulatory compliance. For example, the Sarbanes-Oxley Act
of 2002  mandates  or suggests  additional  compliance  measures  with regard to
governance,  disclosure,  audit and other areas. In light of these changes,  the
Partnership  expects that it will incur higher  expenses  related to compliance,
including increased legal and audit fees.

Distributions  received in excess of investment  in Local  Limited  Partnerships
represent the Partnership's proportionate share of the excess cash available for
distribution from the Local Limited Partnerships.  As a result of the use of the
equity method of accounting for the  Partnership's  investments,  investments in
the two remaining Local Limited Partnerships had been reduced to zero as of June
30, 2004. For these  investments,  cash  distributions  received are recorded in
income  as  distributions  received  in excess of  investment  in Local  Limited
Partnerships.  If these investments had not been reduced to zero,  distributions
received would be recorded as distributions  from Local Limited  Partnerships in
the  statements of cash flows and would reduce the  Partnership's  investment on
the balance sheet. A distribution  of  approximately  $1,000 was received during
the six months ended June 30, 2004 from a Local  Limited  Partnership  which was
sold  several  years  ago as a result  of some  remaining  cash it had not used.
Distributions of approximately $1,108,000 comprised of proceeds from the sale of
Caroline  Arms were  received  during the six months  ended  June 30,  2003.  In
addition,  the  Partnership  received  approximately  $3,000 from  Harold  House
Limited  Partnership in repayment of advances and accrued interest deemed by the
Partnership as unlikely to be collected and treated as an additional  investment
in the Local Limited Partnership.  The receipt of distributions in the future is
dependent upon the operations of the underlying  properties of the Local Limited
Partnerships  to generate  sufficient  cash for  distribution in accordance with
applicable HUD regulations.

Cash and cash equivalents amounted to approximately  $26,000 and $73,000 at June
30,  2004  and  2003,   respectively.   Cash  and  cash  equivalents   decreased
approximately  $27,000 from  December 31, 2003 due to  approximately  $28,000 of
cash used in operating  activities,  partially offset by approximately $1,000 of
cash  provided  by  investing  activities.  Cash  used in  operating  activities
consisted of the payment of non-resident  income tax withholding to the state of
Colorado on behalf of limited  partners,  partially  offset by  reimbursement by
limited partners of non-resident  income tax withholding paid by the Partnership
in 2003 to the  state of North  Carolina  on behalf of  limited  partners.  Cash
provided by investing activities consisted of the receipt of a distribution from
a Local Limited Partnership. The ability of the Partnership to meet its on-going
cash  requirements  in excess of cash on hand at June 30, 2004 is dependent upon
the future  receipt of  distributions  from the Local  Limited  Partnerships  or
proceeds from sales or refinancing  of one or more of the underlying  properties
of the  Local  Limited  Partnerships.  The  Partnership's  only  other  form  of
liquidity  is  advances  from the General  Partner.  The  General  Partner  will
evaluate  advancing the Partnership  additional  funds as such funds are needed,
but is in no way legally obligated to make such advances.

The Partnership  currently owes the General Partner  approximately  $443,000 for
administrative  and  reporting  services  performed.  The  payment of the unpaid
administrative  and reporting fees will most likely result,  if at all, from the
sale  or  refinancing  of  the  underlying   properties  of  the  Local  Limited
Partnerships,  rather than through recurring operations.  The Partnership repaid
approximately  $933,000  of  administrative  and  reporting  fees during the six
months ended June 30, 2003. There was no such payment made during the six months
ended June 30, 2004.

On February 13, 2003  Caroline  Arms  Limited  Partnership  sold its  investment
property to an  unaffiliated  third party for  $4,600,000.  After paying closing
costs, the net proceeds were used to repay the mortgage encumbering the property
along with other liabilities of the property and the Local Limited  Partnership.
In  accordance  with an  agreement  reached with the note holder of the deferred
acquisition  note  60% or  approximately  $1,663,000  as of June  30,  2003  and
approximately  $1,670,000  as of  December  31, 2003 of the  remainder  was paid
against the  principal of this note and 40%, or  approximately  $1,108,000 as of
June 30,  2003  and  approximately  $1,113,000  as of  December  31,  2003,  was
distributed to the Partnership.  An additional  $198,000 as of June 30, 2003 and
December 31, 2003 was received by the  Partnership for the repayment of advances
to Caroline Arms Limited  Partnership  which had previously been deemed unlikely
to be collected.  The funds received by the Partnership were used to pay certain
of its liabilities.  As of December 31, 2003, the Local Limited  Partnership had
been completely liquidated.

Harold House and San Juan Del Centro Limited  Partnerships both have notes which
were executed by the respective  Local Limited  Partnerships  with the seller as
part of the  acquisition of the property by the Local Limited  Partnership.  The
notes were nonrecourse  notes secured by a security  interest in all Partnership
interests  in  the  Local  Limited  Partnership  and  are  subordinated  to  the
respective mortgage notes on each property for as long as the mortgage notes are
insured by HUD. Any  payments  due from project  income are payable from surplus
cash,  as  defined  by  the  HUD  Regulatory  Agreement.   Neither  the  Limited
Partnership  nor any  partners  thereof,  present or future  assume any personal
liability for the payment of the notes. The notes were due November 15, 1999 and
December 20, 1999,  respectively.  Each note is in default and the Local Limited
Partnership interests are subject to potential foreclosure.  Continuation of the
Local Limited  Partnerships'  operations in the present form is dependent on its
ability to extend the maturity date of their  respective  notes,  or to repay or
refinance  their  note.  Both of the Local  Limited  Partnerships  are  actively
attempting to sell their respective net assets.

As a result  of the  conditions  above,  there is  substantial  doubt  about the
Partnership's  ability to continue as a going concern.  The financial statements
do  not  include  any  adjustments  to  reflect  the  possible  effects  on  the
recoverability  and  classification of assets or amounts and  classifications of
liabilities that may result from these uncertainties.

Results of Operations

The  Partnership  originally  invested  as a limited  partner  in Local  Limited
Partnerships which operated  twenty-one rental housing  properties.  At June 30,
2004,  the  Partnership  continued  to hold an  interest  in two  Local  Limited
Partnerships.  To the extent  the  Partnership  still has a carrying  basis in a
respective Local Limited  Partnership,  results of operations are  significantly
impacted  by the  Partnership's  share of the  profits  or  losses  in the Local
Limited  Partnership.  These profits or losses include  depreciation and accrued
note payable interest expense which are noncash in nature.  As of June 30, 2004,
the  Partnership  had no  carrying  basis  in the two  remaining  Local  Limited
Partnerships  and therefore  reflected no results of operations for its share of
profits or losses from these Local Limited Partnerships.

The Partnership had a net loss of approximately $28,000 for the six months ended
June 30, 2004,  compared to net income of  approximately  $1,248,000 for the six
months ended June 30, 2003. Net loss per unit of limited  partnership  was $1.58
for the six months  ended  June 30,  2004  compared  to net income of $67.73 per
limited partnership unit for the six months ended June 30, 2003. The increase in
net  loss  for the six  months  ended  June  30,  2004  is  attributable  to the
recognition  of  approximately  $1,238,000  of  profits  from the Local  Limited
Partnerships  and interest  received on advances to Local  Limited  Partnerships
during the six months  ended June 30,  2003.  Both  amounts were a result of the
sale of the property owned by Caroline Arms Limited  Partnership as noted above.
The Partnership did not recognize  approximately  $58,000 of its allocated share
of losses from the remaining two Local Limited  Partnerships  for the six months
ended June 30, 2004,  as the  Partnership's  net  carrying  basis in these Local
Limited Partnerships had been reduced to zero. The Partnership's share of losses
from the Local Limited  Partnerships,  if not limited to its investment  account
balance,  would  have  increased  approximately  $11,000  between  periods.  The
increase is primarily due to an increase in operating expenses at the properties
owned by the two remaining Local Limited Partnerships.

Recent Accounting Pronouncements

In January  2003 and revised in December  31,  2003,  the  Financial  Accounting
Standards Board ("FASB") issued Interpretation No. 46 ("FIN 46"),  Consolidation
of Variable Interest Entities.  FIN 46 requires the consolidation of entities in
which an enterprise absorbs a majority of the entity's expected losses, receives
a majority of the entity's expected  residual  returns,  or both, as a result of
ownership,  contractual or other financial interests in the entity. Prior to the
issuance of FIN 46,  entities were generally  consolidated by an enterprise when
it had a controlling  financial  interest through ownership of a majority voting
interest in the entity. FIN 46 applied immediately to variable interest entities
created  after  January 31, 2003,  and with respect to variable  interests  held
before  February 1, 2003, FIN 46 will apply to financial  statements for periods
ending after December 15, 2004.

The Partnership has not entered into any partnership  investments  subsequent to
January  31,  2003.  The  Partnership  is  in  the  process  of  evaluating  its
investments in unconsolidated  partnerships that may be deemed variable interest
entities under the provisions of FIN 46. The  Partnership has not yet determined
the anticipated  impact of adopting FIN 46 for its  partnership  agreements that
existed as of December 31, 2003.  However,  FIN 46 may require the consolidation
of the  assets,  liabilities  and  operations  of certain  of the  Partnership's
unconsolidated  partnership  investments.  Although  the  Partnership  does  not
believe  the full  adoption  of FIN 46 will  have an impact  on cash  flow,  the
Partnership cannot make any definitive  conclusion on the impact on net earnings
until it completes its evaluation,  including an evaluation of the Partnership's
maximum exposure to loss.

ITEM 3.     CONTROLS AND PROCEDURES

(a) Disclosure Controls and Procedures.  The Partnership's management,  with the
participation of the principal executive officer and principal financial officer
of the General Partner,  who are the equivalent of the  Partnership's  principal
executive officer and principal financial officer,  respectively,  has evaluated
the  effectiveness of the Partnership's  disclosure  controls and procedures (as
such term is defined  in Rules  13a-15(e)  and  15d-15(e)  under the  Securities
Exchange  Act of 1934,  as amended  (the  "Exchange  Act")) as of the end of the
period covered by this report. Based on such evaluation, the principal executive
officer and  principal  financial  officer of the General  Partner,  who are the
equivalent  of the  Partnership's  principal  executive  officer  and  principal
financial  officer,  respectively,  have  concluded  that, as of the end of such
period, the Partnership's disclosure controls and procedures are effective.

(b) Internal Control Over Financial  Reporting.  There have not been any changes
in the Partnership's  internal control over financial reporting (as such term is
defined in Rules  13a-15(f)  and  15d-15(f)  under the Exchange  Act) during the
fiscal quarter to which this report relates that have  materially  affected,  or
are reasonably likely to materially affect,  the Partnership's  internal control
over financial reporting.

                           PART II - OTHER INFORMATION



ITEM 6      EXHIBITS AND REPORTS ON FORM 8-K

            a)    Exhibits

                  See Exhibit Index attached.

            b)    Reports on Form 8-K:

                  None filed during the quarter ended June 30, 2004.


<PAGE>


                                   SIGNATURES



In accordance with the  requirements of the Exchange Act, the registrant  caused
this  report to be  signed on its  behalf  by the  undersigned,  thereunto  duly
authorized.



                                    NATIONAL HOUSING PARTNERSHIP REALTY FUND TWO
                                    (Registrant)


                                    By:   The National Housing Partnership,
                                          Its sole General Partner


                                    By:   National Corporation for Housing
                                          Partnerships,   its  sole  General
                                          Partner


                                    By:   /s/David R. Robertson
                                          David R. Robertson
                                          President and Chief Executive Officer


                                    By:   /s/Stephen B. Waters
                                          Stephen B. Waters
                                          Vice President


                                    Date: August 6, 2004



<PAGE>


                                  EXHIBIT INDEX


Exhibit

 31.1             Certification   of  equivalent  of  Chief  Executive   Officer
                  pursuant to Securities Exchange Act Rules 13a-14(a)/15d-14(a),
                  as Adopted Pursuant to Section 302 of the  Sarbanes-Oxley  Act
                  of 2002.

 31.2             Certification   of  equivalent  of  Chief  Financial   Officer
                  pursuant to Securities Exchange Act Rules 13a-14(a)/15d-14(a),
                  as Adopted Pursuant to Section 302 of the  Sarbanes-Oxley  Act
                  of 2002.

 32.1             Certification  Pursuant  to 18  U.S.C.  Section  1350,  as
                  Adopted Pursuant to Section 906 of the  Sarbanes-Oxley Act
                  of 2002.



<PAGE>




Exhibit 31.1


                                  CERTIFICATION


I, David R. Robertson, certify that:


1.    I have reviewed this quarterly  report on Form 10-QSB of National  Housing
      Partnership Realty Fund Two;

2.    Based on my knowledge,  this report does not contain any untrue  statement
      of a material fact or omit to state a material fact  necessary to make the
      statements made, in light of the circumstances under which such statements
      were made,  not  misleading  with  respect  to the period  covered by this
      report;

3.    Based on my  knowledge,  the  financial  statements,  and other  financial
      information  included  in this  report,  fairly  present  in all  material
      respects the financial condition,  results of operations and cash flows of
      the small  business  issuer as of, and for, the periods  presented in this
      report;

4.    The  small  business  issuer's  other  certifying  officer(s)  and  I  are
      responsible  for  establishing  and  maintaining  disclosure  controls and
      procedures (as defined in Exchange Act Rules  13a-15(e) and 15d-15(e)) for
      the small business issuer and have:

      (a)   Designed such  disclosure  controls and  procedures,  or caused such
            disclosure   controls  and  procedures  to  be  designed  under  our
            supervision,  to ensure that  material  information  relating to the
            small business issuer, including its consolidated  subsidiaries,  is
            made  known to us by  others  within  those  entities,  particularly
            during the period in which this report is being prepared;

      (b)   Evaluated  the   effectiveness   of  the  small  business   issuer's
            disclosure  controls and procedures and presented in this report our
            conclusions about the  effectiveness of the disclosure  controls and
            procedures, as of the end of the period covered by this report based
            on such evaluation; and

      (c)   Disclosed in this report any change in the small  business  issuer's
            internal  control over financial  reporting that occurred during the
            small  business  issuer's  most  recent  fiscal  quarter  (the small
            business  issuer's  fourth  fiscal  quarter in the case of an annual
            report) that has  materially  affected,  or is reasonably  likely to
            materially affect, the small business issuer's internal control over
            financial reporting; and

5.    The  small  business  issuer's  other  certifying  officer(s)  and I  have
      disclosed,  based on our most recent  evaluation of internal  control over
      financial reporting, to the small business issuer's auditors and the audit
      committee of the small  business  issuer's  board of directors (or persons
      performing the equivalent functions):

      (a)   All significant  deficiencies and material  weaknesses in the design
            or operation of internal control over financial  reporting which are
            reasonably  likely to adversely  affect the small business  issuer's
            ability  to  record,   process,   summarize  and  report   financial
            information; and

      (b)   Any fraud,  whether or not  material,  that  involves  management or
            other  employees who have a significant  role in the small  business
            issuer's internal control over financial reporting.

Date:  August 6, 2004

                                    /s/David R. Robertson
                                    David R. Robertson
                                    President  and Chief  Executive  Officer  of
                                    National     Corporation     for     Housing
                                    Partnerships,   equivalent   of  the   chief
                                    executive officer of the Partnership


<PAGE>



Exhibit 31.2


                                  CERTIFICATION


I, Stephen B. Waters, certify that:


1.    I have reviewed this quarterly  report on Form 10-QSB of National  Housing
      Partnership Realty Fund Two;

2.    Based on my knowledge,  this report does not contain any untrue  statement
      of a material fact or omit to state a material fact  necessary to make the
      statements made, in light of the circumstances under which such statements
      were made,  not  misleading  with  respect  to the period  covered by this
      report;

3.    Based on my  knowledge,  the  financial  statements,  and other  financial
      information  included  in this  report,  fairly  present  in all  material
      respects the financial condition,  results of operations and cash flows of
      the small  business  issuer as of, and for, the periods  presented in this
      report;

4.    The  small  business  issuer's  other  certifying  officer(s)  and  I  are
      responsible  for  establishing  and  maintaining  disclosure  controls and
      procedures (as defined in Exchange Act Rules  13a-15(e) and 15d-15(e)) for
      the small business issuer and have:

      (a)   Designed such  disclosure  controls and  procedures,  or caused such
            disclosure   controls  and  procedures  to  be  designed  under  our
            supervision,  to ensure that  material  information  relating to the
            small business issuer, including its consolidated  subsidiaries,  is
            made  known to us by  others  within  those  entities,  particularly
            during the period in which this report is being prepared;

      (b)   Evaluated  the   effectiveness   of  the  small  business   issuer's
            disclosure  controls and procedures and presented in this report our
            conclusions about the  effectiveness of the disclosure  controls and
            procedures, as of the end of the period covered by this report based
            on such evaluation; and

      (c)   Disclosed in this report any change in the small  business  issuer's
            internal  control over financial  reporting that occurred during the
            small  business  issuer's  most  recent  fiscal  quarter  (the small
            business  issuer's  fourth  fiscal  quarter in the case of an annual
            report) that has  materially  affected,  or is reasonably  likely to
            materially affect, the small business issuer's internal control over
            financial reporting; and

5.    The  small  business  issuer's  other  certifying  officer(s)  and I  have
      disclosed,  based on our most recent  evaluation of internal  control over
      financial reporting, to the small business issuer's auditors and the audit
      committee of the small  business  issuer's  board of directors (or persons
      performing the equivalent functions):

      (a)   All significant  deficiencies and material  weaknesses in the design
            or operation of internal control over financial  reporting which are
            reasonably  likely to adversely  affect the small business  issuer's
            ability  to  record,   process,   summarize  and  report   financial
            information; and

      (b)   Any fraud,  whether or not  material,  that  involves  management or
            other  employees who have a significant  role in the small  business
            issuer's internal control over financial reporting.

Date:  August 6, 2004

                                    /s/Stephen B. Waters
                                    Stephen B. Waters
                                    Vice  President of National  Corporation
                                    for Housing Partnerships,  equivalent of
                                    the  chief  financial   officer  of  the
                                    Partnership


<PAGE>

Exhibit 32.1


                          Certification of CEO and CFO
                       Pursuant to 18 U.S.C. Section 1350,
                           As Adopted Pursuant to
               Section 906 of the Sarbanes-Oxley Act of 2002



In  connection  with the  Quarterly  Report on Form 10-QSB of  National  Housing
Partnership Realty Fund Two (the "Partnership"),  for the quarterly period ended
June 30, 2004 as filed with the Securities  and Exchange  Commission on the date
hereof  (the  "Report"),  David R.  Robertson,  as the  equivalent  of the Chief
Executive  Officer of the Partnership,  and Stephen B. Waters, as the equivalent
of the Chief  Financial  Officer  of the  Partnership,  each  hereby  certifies,
pursuant to 18 U.S.C.  Section 1350,  as adopted  pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002, that, to the best of his knowledge:

      (1)   The Report fully complies with the  requirements of Section 13(a) or
            15(d) of the Securities Exchange Act of 1934; and

      (2)   The  information  contained in the Report  fairly  presents,  in all
            material respects, the financial condition and results of operations
            of the Partnership.


                                           /s/David R. Robertson
                                    Name:  David R. Robertson
                                    Date:  August 6, 2004


                                           /s/Stephen B. Waters
                                    Name:  Stephen B. Waters
                                    Date:  August 6, 2004


This  certification is furnished with this Report pursuant to Section 906 of the
Sarbanes-Oxley  Act of 2002 and shall not be deemed filed by the Partnership for
purposes of Section 18 of the Securities Exchange Act of 1934, as amended.