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

                                   Form 10-QSB

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

                    For the quarterly period ended June 30, 2003


[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
    ACT OF 1934


                For the transition period from _________to _________

                         Commission file number 0-14458


                    NATIONAL HOUSING PARTNERSHIP REALTY FUND TWO
               (Exact name of registrant 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)

<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, 2003


ASSETS
   Cash and cash equivalents                                                $ 73
   Investments in and advances to Local Limited
      Partnerships (Note 2)                                                   --
   Receivables - limited partners                                            204
                                                                           $ 277
LIABILITIES AND PARTNERS' CAPITAL (DEFICIENCY)

Liabilities
   Accrued expenses                                                         $ 18
   Administrative and reporting fees payable to
      General Partner (Note 3)                                               432

Partners' capital (deficiency)
   General Partner -- The National Housing
      Partnership (NHP)                                       $  641
   Original Limited Partner -- 1133 Fifteenth
      Street Two Associates                                     (169)
   Other Limited Partners -- 17,723 investment
      units                                                     (645)      (173)

                                                                          $ 277

                   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,
                                                   2003         2002       2003        2002
REVENUES:
  Share of profits from Local Limited
<S>                    <C>                         <C>          <C>       <C>          <C>
    Partnerships (Note 2)                          $ 32         $ --      $ 1,238      $ --
  Interest reveived 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           5           7          10
  Other operating expenses                             39          16          54          29
  Interest on advances from General Partner            --          --          --           1
                                                       42          21          61          40

(Loss) income from partnership operations             (10)        (21)      1,245         (40)
Distributions in excess of investment in
  Local Limited Partnerships (Note 2)                   3          --           3          --

NET (LOSS) INCOME                                  $ (7)       $ (21)     $ 1,248      $ (40)

ALLOCATION OF NET (LOSS) INCOME:
  General Partner - NHP                            $ --         $ --       $ 13        $ --
  Original Limited Partner - 1133 Fifteenth
    Street Two Associates                              --          --          13          --
  Other limited partners                               (7)        (21)      1,222         (40)

                                                   $ (7)       $ (21)     $ 1,248      $ (40)

NET (LOSS) INCOME PER LIMITED PARTNERSHIP
  INTEREST                                        $ (0.39)    $ (1.16)   $ 67.73     $ (2.21)

                   See Accompanying Notes to Financial Statements

</TABLE>

<PAGE>

                    NATIONAL HOUSING PARTNERSHIP REALTY FUND TWO
                    Statement of 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, 2002                 $ 628        $ (182)      $(1,867)      $(1,421)

Net income - six months ended
  June 30, 2003                            13           13         1,222         1,248

Partners' capital (deficiency)
  at June 30, 2003                     $ 641        $ (169)      $ (645)       $ (173)

Percentage interest at
  June 30, 2003                           1%           1%           98%         100%
                                          (A)          (B)           (C)


(A)   General Partner
(B)   Original Limited Partner
(C)   Consists  of  17,723  investment  units at June 30,  2003  and  18,043  at
      December  31, 2002 (see  "Footnote  4" in Notes to  Financial  Statements;
      "Abandonment of Limited Partnership Units).

                   See Accompanying Notes to Financial Statements

</TABLE>

<PAGE>

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

                                                                   Six Months Ended June 30,
                                                                      2003           2002
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
   state of North Carolina on behalf of limited partners               (204)            --
  Operating expenses paid                                               (85)           (49)
  Payment of interest on advances payable to General Partner             (1)            --
        Net cash used in operating activities                        (1,155)           (49)

CASH FLOWS FROM INVESTING ACTIVITIES:
  Distributions from Local Limited Partnerships                       1,108             43
  Repayment of advances to Local Limited Partnership                    133             --
        Net cash provided by investing activities                     1,241             43

CASH FLOWS FROM FINANCING ACTIVITIES:
  Repayment of advances from General Partner                            (73)           (38)
  Proceeds from advances from General Partner                            60             41
        Net cash (used in) provided by financing activities             (13)             3

NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS                     73             (3)

CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD                         --              5

CASH AND CASH EQUIVALENTS AT END OF PERIOD                            $ 73           $ 2

RECONCILIATION OF NET INCOME (LOSS) TO NET CASH USED IN
  OPERATING ACTIVITIES:
   Net income (loss)                                                $ 1,248         $ (40)
   Adjustments to reconcile net income (loss) 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                                                     (3)            --
      Changes in operating assets and liabilities:
        Decrease in accrued interest on advances from
          General Partner                                                (1)            --
        (Decrease) increase in administrative and reporting
           fees payable                                                (926)            10
        Increase in receivables - limited partners                     (204)            --
        Decrease in other accrued expenses                              (31)           (19)
        Total adjustments                                            (2,403)            (9)

Net cash used in operating activities                               $(1,155)        $ (49)

                   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,  2003 are not
necessarily  indicative  of the results that may be expected for the year ending
December 31,  2003.  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, 2002.

Recent Accounting Pronouncements

In January 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 beginning July 1, 2003.

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. At June 30, 2003,  the  Partnership's
maximum exposure to loss with regard to unconsolidated  partnerships is zero due
to the recorded  investment in these  partnerships  having been reduced to zero.
The Partnership has not yet determined the anticipated impact of adopting FIN 46
for its partnership agreements that existed as of January 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 net earnings,  the Partnership cannot make any definitive conclusion until it
completes its evaluation.

(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, 2003, the  Partnership  continues to hold an interest in three Local
Limited  Partnerships:  San Juan del Centro Limited  Partnership,  Caroline Arms
Limited Partnership and Harold House Limited Partnership.  During the six months
ended June 30, 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  of the remainder was paid
against  the  principal  of this note and 40% or  approximately  $1,108,000  was
distributed  to the  Partnership.  An  additional  $198,000  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
and were treated as an additional  investment in the Local Limited  Partnership.
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. It is anticipated
that the Local Limited  Partnership  will be completely  liquidated by September
30, 2003.

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 this uncertainty.

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  $47,000
and $123,000 of losses from two and three Local Limited  Partnerships during the
six months  ended June 30,  2003 and 2002,  respectively.  During 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.  For the six months ended June 30,
2002,  there were no profits offset against prior years' losses not taken. As of
June 30, 2003, the  Partnership has not recognized  approximately  $1,766,000 of
its allocated  cumulative share of losses from two Local Limited Partnerships in
which its investment has been reduced to zero.

During 1993, the Partnership  re-evaluated the timing of the  collectibility  of
the  advances  and  determined,   based  on  the  Local  Limited   Partnerships'
operations,  that such advances are not likely to be collected.  For  accounting
purposes,  the Partnership treated the advance balance as additional investments
in the Local Limited Partnerships.  The balance was then reduced to zero, with a
corresponding  charge to  operations  to  reflect a  portion  of the  previously
unrecognized losses on investments. The Partnership did not advance any funds to
the Local  Limited  Partnerships  during the six months  ended June 30, 2003 and
2002.

Advances  to the  Local  Limited  Partnership  remain  due  and  payable  to the
Partnership. Interest is calculated at the prime rate plus 2% (6.00% at June 30,
2003).  Payment of principal and interest is  contingent  upon the Local Limited
Partnerships having available surplus cash, as defined by HUD regulations,  from
operations  or from the sale or  refinancing  of the Local  Limited  Partnership
properties.  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.  At June 30, 2003, the remaining Local Limited Partnerships do not
have any advances owed to the partnership.

The following are unaudited combined statements of operations for the six months
ended  June 30,  2003 and 2002 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.  The information
for the six  months  ended  June 30,  2002  has been  restated  to  reflect  the
operations  of  the  Local  Limited  Partnerships  which  were  either  sold  or
foreclosed as discontinued operations.
<TABLE>
<CAPTION>

                             COMBINED STATEMENTS OF OPERATIONS
                                         Three Months Ended           Six Months Ended
                                              June 30,                    June 30,
                                         2003          2002          2003          2002
                                                         (in thousands)
                                                    (Restated)                  (Restated)
<S>                                      <C>           <C>           <C>          <C>
Rental income                            $ 338         $ 347         $ 658        $ 663
Other income                                 64           101           141          131
   Total income                             402           448           799          794

Operating expenses                          157           243           397          443
Interest, taxes, and insurance              124           164           242          236
Depreciation                                106            89           209          190
   Total expenses                           387           496           848          869

Net income (loss) before
  discontinued operations                    15           (48)          (49)         (75)
Income (loss) from discontinued               2           (31)          (25)         (50)
  operations
Gain on sale of discontinued
  operations                                 60            --           262           --
 (Loss) gain on forgiveness of
  debt of discontinued operations           (26)           --         2,728           --
Net income (loss)                        $ 51          $ (79)       $ 2,916       $ (125)

National Housing Partnership
  Realty Fund II share of income
    (loss)                               $ 47          $ (77)       $ 2,752       $ (123)
</TABLE>

(3) TRANSACTIONS WITH THE GENERAL PARTNER

During the six month  periods  ended  June 30,  2003 and 2002,  the  Partnership
accrued  administrative and reporting fees payable to the General Partner in the
amount of approximately $7,000 and $10,000,  respectively, for services provided
to the  Partnership.  The  amount  of fees  due to the  General  Partner  by the
Partnership   was   approximately   $432,000  at  June  30,  2003.  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.

The General Partner advanced the Partnership  approximately  $60,000 and $41,000
during the six months ended June 30, 2003 and 2002, respectively. 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.
During the six months ended June 30, 2002, the  Partnership  repaid  advances of
approximately $38,000 to the General Partner.  Interest is charged on borrowings
at the Chase  Manhattan  Bank prime  interest  rate plus 2% and amounted to less
than $1,000 for the six months ended June 30, 2003 and approximately  $1,000 for
the six months ended June 30, 2002.  There were no advances or accrued  interest
owed to the General Partner at June 30, 2003.

(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 18,043 units.

(5) LEGAL PROCEEDINGS

The Partnership is unaware of any pending or outstanding  litigation that is not
of a routine nature arising in the ordinary course of business.

(6) GOING CONCERN

Two of the remaining  three 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
the ability of the  Partnership  to continue as a going  concern.  The financial
statements do not include any adjustments which might result from the outcome of
this uncertainty.



<PAGE>




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

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,  2003,  the  Partnership  retained  an  interest  in three 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  and is studying new federal laws,
including  the  Sarbanes-Oxley  Act of  2002.  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
two of the three remaining Local Limited  Partnerships  had been reduced to zero
as of June 30, 2003.  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.  During the six months ended June 30, 2003, the
Partnership  received a distribution of approximately  $1,108,000  consisting of
the  Partnership's  share of net proceeds from the sale of Caroline Arms Limited
Partnership's   investment  property.  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.  This  repayment  is  included  as  a  distribution  in  excess  of
investment  in Local  Limited  Partnerships  in the  accompanying  statements of
operations.  During the six months ended June 30, 2002, the Partnership received
a distribution of approximately $43,000 comprised of the final proceeds from the
2001 sale of Windsor  Apartments.  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  $73,000 and $2,000 at June
30,  2003  and  2002,   respectively.   Cash  and  cash  equivalents   increased
approximately $73,000 from December 31, 2002 due to approximately  $1,241,000 of
cash  provided  by  investing   activities  partially  offset  by  approximately
$1,155,000  and  $13,000 of cash used in  operating  and  financing  activities,
respectively.  Cash provided by investing  activities consisted of distributions
received from Local Limited  Partnerships and the repayment of advances to Local
Limited Partnerships. Cash used in financing activities consisted of payments on
advances from the General Partner partially offset by advances received from the
General  Partner.  Cash used in  operating  activities  consisted  of payment of
administrative  and reporting fees to the General Partner,  non-resident  income
tax withholding to the state of North Carolina on behalf of investors, operating
expenses and interest on advances from the General Partner  partially  offset by
the receipt of interest on  advances to Local  Limited  Partnerships  previously
deemed  uncollectable.  The ability of the Partnership to meet its on-going cash
requirements  in excess of cash on hand at June 30, 2003 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  Partnerships  only other form of liquidity is
advances  from the General  Partner.  During the six months  ended June 30, 2003
approximately  $60,000  of working  capital  advances  were made by the  General
Partner to the  Partnership.  The Partnership  repaid advances of  approximately
$73,000  during the six months  ended June 30,  2003.  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  $432,000 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 were no such  payments  made during the six
months ended June 30, 2002.

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  of the  remainder  was paid
against the  principal of this note and 40%, or  approximately  $1,108,000,  was
distributed  to the  Partnership.  An  additional  $198,000  was received by the
Partnership  for the repayment of advances to Caroline Arms Limited  Partnership
which had previously been deemed unlikely to be collected and were treated as an
additional  investment in the Local Limited  Partnership.  The funds received by
the Partnership were used to pay certain of its  liabilities.  It is anticipated
that the Local Limited  Partnership  will be completely  liquidated by September
30, 2003.

Harold  House and San Juan Del  Centro  Limited  Partnerships  both  have  notes
payable 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 investment properties.

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  invested as a limited  partner in Local  Limited  Partnerships
which  operated  twenty-one  rental  housing  properties.  At June 30, 2003, the
Partnership  continued to hold an interest in three 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, 2003, the Partnership had no
carrying  basis in two of the  remaining  three 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 net income of  approximately  $1,248,000 for the six months
ended June 30, 2003, compared to a net loss of approximately $40,000 for the six
months  ended June 30,  2002.  Net income  per unit of limited  partnership  was
$67.73 for the six months  ended June 30,  2003  compared to a net loss of $2.21
per  limited  partnership  unit for the six  months  ended  June 30,  2002.  The
increase in net income for the six months ended June 30, 2003 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.
Both amounts were a result of the sale of the  property  owned by Caroline  Arms
Limited  Partnership as noted above. The profits recognized are comprised of the
Partnership's  share of the  profits of Caroline  Arms  Limited  Partnership  of
approximately  $2,799,000  offset  against  prior years' net losses not taken of
approximately  $1,561,000.  The  Partnership  did  not  recognize  approximately
$47,000 of its allocated share of losses from two Local Limited Partnerships for
the six months ended June 30, 2003, 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 decreased  approximately $26,000 between
periods.  The  decrease is  primarily  due to a decrease in  operating  expenses
partially  offset by  increases  in  deprecation,  interest,  tax and  insurance
expenses  at  the   properties   owned  by  the  two  remaining   Local  Limited
Partnerships.

Recent Accounting Pronouncements

In January 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 beginning July 1, 2003.

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. At June 30, 2003,  the  Partnership's
maximum exposure to loss with regard to unconsolidated  partnerships is zero due
to the recorded  investment in these  partnerships  having been reduced to zero.
The Partnership has not yet determined the anticipated impact of adopting FIN 46
for its partnership agreements that existed as of January 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 net earnings,  the Partnership cannot make any definitive conclusion until it
completes its evaluation.

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.



<PAGE>


                           PART II - OTHER INFORMATION



ITEM 6      EXHIBITS AND REPORTS ON FORM 8-K

            a)    Exhibits

                  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.

            b)    Reports on Form 8-K:

                  None filed during the quarter ended June 30, 2003.


<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/Patrick J. Foye
                                          Patrick J. Foye
                                          President


                                    By:   /s/Thomas C. Novosel
                                          Thomas C. Novosel
                                          Senior Vice President
                                          and Chief Accounting Officer


                                    Date: August 12, 2003



<PAGE>
Exhibit 31.1


                                  CERTIFICATION


I, Patrick J. Foye, 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 registrant as of, and for, the periods presented in this report;

4.    The  registrant'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 registrant
      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
            registrant,  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 registrant'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  registrant's  internal
            control  over   financial   reporting   that  occurred   during  the
            registrant's  most recent fiscal  quarter (the  registrant's  fourth
            fiscal  quarter in the case of an annual report) that has materially
            affected,   or  is  reasonably  likely  to  materially  affect,  the
            registrant's internal control over financial reporting; and

5.    The registrant's other certifying  officer(s) and I have disclosed,  based
      on  our  most  recent   evaluation  of  internal  control  over  financial
      reporting,  to the  registrant's  auditors and the audit  committee of the
      registrant'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  registrant'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  registrant's
            internal control over financial reporting.

Date:  August 12, 2003

                                   /s/Patrick J. Foye
                                   Patrick J. Foye
                                   President of National Corporation for Housing
                                   Partnerships, equivalent of the chief
                                   executive officer of the Partnership


<PAGE>



Exhibit 31.2


                                  CERTIFICATION


I, Paul J. McAuliffe, 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 registrant as of, and for, the periods presented in this report;

4.    The  registrant'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 registrant
      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
            registrant,  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 registrant'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  registrant's  internal
            control  over   financial   reporting   that  occurred   during  the
            registrant's  most recent fiscal  quarter (the  registrant's  fourth
            fiscal  quarter in the case of an annual report) that has materially
            affected,   or  is  reasonably  likely  to  materially  affect,  the
            registrant's internal control over financial reporting; and

5.    The registrant's other certifying  officer(s) and I have disclosed,  based
      on  our  most  recent   evaluation  of  internal  control  over  financial
      reporting,  to the  registrant's  auditors and the audit  committee of the
      registrant'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  registrant'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  registrant's
            internal control over financial reporting.

Date:  August 12, 2003

                                    /s/Paul J. McAuliffe
                                    Paul J. McAuliffe
                                    Executive Vice President and Chief Financial
                                    Officer 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
Realty Fund Two (the  "Partnership"),  for the  quarterly  period ended June 30,
2003 as filed with the  Securities  and Exchange  Commission  on the date hereof
(the  "Report"),  Patrick  J. Foye,  as the  equivalent  of the chief  executive
officer of the  Partnership,  and Paul J.  McAuliffe,  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/Patrick J. Foye
                                    Name:  Patrick J. Foye
                                    Date:  August 12, 2003


                                           /s/Paul J. McAuliffe
                                    Name:  Paul J. McAuliffe
                                    Date:  August 12, 2003


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.