FORM 10-QSB--QUARTERLY OR TRANSITIONAL REPORT UNDER SECTION 13 OR 15(d) OF
                       THE SECURITIES EXCHANGE ACT OF 1934

                        Quarterly or Transitional Report

                      U.S. 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, 2000


[ ] 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
          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 (1) filed all reports  required to be filed by Section
13 or 15(d) of the  Securities  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___

                         PART I - FINANCIAL INFORMATION

ITEM 1.     FINANCIAL STATEMENTS

a)
                    NATIONAL HOUSING PARTNERSHIP REALTY FUND TWO

                         Statement of Financial Position

                                   (Unaudited)

                                  June 30, 2000

                                 (in thousands)

ASSETS

   Investments in and advances to Local Limited
      Partnerships (Note 2)                                      $ 4,563


LIABILITIES AND PARTNERS' DEFICIT

Liabilities

   Accrued expenses                                              $    35
   Administrative and reporting fees payable to
      General Partner                                              1,256
   Notes payable to General Partner                                2,414
   Accrued interest on notes payable to General Partner            3,659
                                                                   7,364
Partners' deficit

   General Partner -- The National Housing

      Partnership (NHP)                                             (183)
   Original Limited Partner -- 1133 Fifteenth
      Street Two Associates                                         (187)
   Other Limited Partners -- 18,258 investment
      units                                                       (2,431)
                                                                  (2,801)
                                                                 $ 4,563

                   See Accompanying Notes to Financial Statements


b)

                    NATIONAL HOUSING PARTNERSHIP REALTY FUND TWO

                            Statements of Operations

                                   (Unaudited)

                        (in thousands, except unit data)

<TABLE>
<CAPTION>

                                             Three Months Ended       Six Months Ended
                                                  June 30,                June 30,
                                              2000        1999        2000        1999
Revenues:
  Share of profits from Local

<S>                                         <C>           <C>         <C>        <C>
     Limited Partnership                    $   27        $   67      $   29     $   125
  Distributions in excess of investment
    in Local Limited Partnership                34            --          34          --
  Interest income from Local
     Limited Partnership                        --           124          --         124
                                                61           191          63         249
costs and Expenses:
  Administrative and reporting fees
    to General Partner                           7            35          36          69
  Interest on notes payable to
    General Partner                             61            60         117         121
  Interest on partner loans                     --            --          --           1
  Other operating expenses                      29            14          41          32
                                                97           109         194         223

Net income (loss)                          $   (36)      $    82     $  (131)    $    26

allocation of net income (loss):
  General Partner - NHP                    $    --       $     1     $    (1)    $    --
  Original Limited Partner - 1133
    Fifteenth Street Two Associates             --             1          (1)         --
  Other limited partners -
  Investment units                             (36)           80        (129)         26
                                           $   (36)      $    82     $  (131)    $    26
net income (loss) per limited partnership
  interest                                 $    (2)      $     4     $    (7)    $     1


                      See Accompanying Notes to Financial Statements
</TABLE>

c)

                    NATIONAL HOUSING PARTNERSHIP REALTY FUND TWO

                         Statement of Partners' Deficit

                                   (Unaudited)

                                 (in thousands)
<TABLE>
<CAPTION>

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

<S>                 <C> <C>         <C>          <C>           <C>           <C>
Deficit at December 31, 1999        $ (182)      $ (186)       $(2,302)      $(2,670)

Net loss - six months ended
   June 30, 2000                        (1)          (1)          (129)         (131)

Deficit at June 30, 2000            $ (183)      $ (187)       $(2,431)      $(2,801)

Percentage interest at
   June 30, 2000                        1%           1%            98%          100%
                                        (A)          (B)            (C)


(A)   General Partner
(B)   Original Limited Partner

(C)   Consists of 18,258 investment units

                   See Accompanying Notes to Financial Statements
</TABLE>

d)
                    NATIONAL HOUSING PARTNERSHIP REALTY FUND TWO

                        (A Maryland Limited Partnership)

                            Statements of Cash Flows

                                   (Unaudited)

                                 (in thousands)
<TABLE>
<CAPTION>

                                                                 Six Months Ended
                                                                     June 30,

                                                                2000          1999
CASH FLOWS FROM OPERATING ACTIVITIES:
<S>                                                         <C>           <C>
   Operating expenses paid                                  $    (41)     $   (48)
   Interest income received from Local Limited                    --          124
      Partnership

   Distributions received in excess of investment in
     Local Limited Partnership                                    34           --
   Payment of administrative reporting fees to General
      Partner                                                     --          (97)
   Payment of interest on partner loans                           --           (3)

   Net cash used in operating activities                          (7)         (24)

CASH FLOWS FROM FINANCING ACTIVITIES
   Repayment of advances from General Partner                     --          (34)

Cash flows from investing activities
   Distributions from Local Limited Partnership                    5           61

NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS              (2)           3

CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD                   2           26

CASH AND CASH EQUIVALENTS AT END OF PERIOD                  $     --     $     29

RECONCILIATION OF NET (LOSS) INCOME TO NET CASH USED IN
   OPERATING ACTIVITIES:
     Net (loss) income                                      $   (131)    $     26
     Adjustments to reconcile net (loss) income to net
     cash used in operating activities:
      Share of profits from Local Limited Partnerships           (29)        (125)
      Increase in accrued interest on deferred
        acquisition notes                                        117          121
      Decrease in accrued interest on Partner loans               --           (1)
      (Decrease) increase in administrative and
        reporting fees payable                                    36          (29)
      (Decrease) increase in other accrued expenses               --          (16)

      Total adjustments                                          124          (50)

Net cash used in operating activities                       $     (7)    $    (24)

                   See Accompanying Notes to Financial Statements
</TABLE>

e)
                    NATIONAL HOUSING PARTNERSHIP REALTY FUND TWO

                        (A Maryland Limited Partnership)

                          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. NHP is the general partner of 1133 Fifteenth Street Two Associates.

Basis of Presentation

The accompanying  unaudited interim financial statements reflect all adjustments
which are, in the opinion of  management,  necessary for a fair statement of the
financial condition and results of operations for the interim periods presented.
All such adjustments are of a normal and recurring nature.

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, 1999.

Certain reclassifications have been made to the 1999 information to conform with
the 2000 presentation.

(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:
Meadows Apartments Limited Partnership,  Esbro Limited Partnership,  Rodeo Drive
Limited   Partnership,   Menlo  Limited   Partnership,   Mayfair  Manor  Limited
Partnership,  Hurbell I Limited  Partnership,  Hurbell II  Limited  Partnership,
Hurbell III Limited  Partnership,  Tinker Creek  Limited  Partnership,  Rockwell
Limited  Partnership,  Meadows East Apartments  Limited  Partnership,  Kimberton
Apartments Limited Partnership, San Juan del Centro Limited Partnership, Gulfway
Limited  Partnership,   Caroline  Arms  Limited  Partnership,   Hilltop  Limited
Partnership,  Harold  House  Limited  Partnership,  Park  Avenue  West I Limited
Partnership,  West Oak Village Limited Partnership,  Park Avenue West II Limited
Partnership, and Windsor Apartments Associates Limited Partnership. During 1998,
the  Partnership's  interest  in  Gulfway  Limited  Partnership,  Menlo  Limited
Partnership  and Rockwell  Limited  Partnership  were foreclosed upon and Tinker
Creek Limited  Partnerhsip  sold its property.  During 1999,  the  Partnership's
interest in Meadows East Apartments  Limited  Partnership and Meadows Apartments
Limited  Partnership were foreclosed upon. During the first quarter of 2000, the
Partnership's  interest in Esbro  Limited  Partnership,  Mayfair  Manor  Limited
Partnership, Park Avenue West I Limited Partnership, Park Avenue West II Limited
Partnership, and Rodeo Drive Limited Partnership was foreclosed upon.

Meadows  Apartments and Meadows East Apartments  Limited  Partnerships  both had
notes  payable  which  were  due  on  December  12,  1997.   The  Local  Limited
Partnerships did not have the resources to pay the amounts due. Effective August
5, 1999 and December 1, 1999,  Meadows  Apartments  and Meadows East  Apartments
Limited  Partnership  notes  were  foreclosed  upon.  Pursuant  to the  security
agreement  of the note  payable,  the note  holder was  substituted  as the sole
limited partner of the Local Limited Partnership in place of the Partnership and
the note holder's  assignee was substituted as the general  partner.  No gain or
loss has been recorded as a result of the transfer of this partnership interest.
With the loss of the  Partnership's  interest in Meadows  Apartments and Meadows
East Apartments to the note holders, the Partnership will not receive any future
benefits from these Local Limited Partnerships.

Esbro,  Mayfair  Manor,  Park Avenue West I, Park Avenue West II and Rodeo Drive
Limited  Partnership  all had notes  payable  which were due October  15,  1997,
October 15, 1997,  December  20,  1999,  December 20, 1999 and December 6, 1997,
respectively.  The Local Limited  Partnerships did not have the resources to pay
the amounts due. During January 2000, the holders of the notes payable  relating
to Esbro, Mayfair Manor, Park Avenue West I, Park Avenue West II and Rodeo Drive
Limited  Partnership  properties  exercised  their  remedies  under the security
agreement with respect to such notes payable,  and were  substituted as the sole
limited  partner of the  applicable  Local Limited  Partnership  in place of the
Partnership  and such note  holder's  assignee  was  substituted  as the general
partner.  No gain or loss has been  recorded as a result of the transfer of this
partnership  interest.  With the loss of the  Partnership's  interest  in Esbro,
Mayfair  Manor,  Park  Avenue West I, Park Avenue West II and Rodeo Drive to the
note holders,  the  Partnership  will not receive any future benefits from these
Local Limited  Partnerships  and taxable  income through the date of foreclosure
will be generated  and  allocated  to the  Partnership's  investors  without any
distributable cash. The specific impact of the tax consequence is dependent upon
each specific partner's individual tax situation.

In addition Caroline Arms, Harold House, Hilltop, Hurbell I, Hurbell II, Hurbell
III, and San Juan Del Cantro Limited  Partnerships  all have notes payable which
are  currently  in  default  and  accordingly,  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 the  respective  notes,  or to repay or refinance
their note. 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  $367,000
and $443,000 of losses from ten and thirteen Local Limited  Partnerships  during
the six months ended June 30, 2000 and 1999, respectively. During the six months
ended June 30, 2000,  the  Partnership's  share of profits in one Local  Limited
Partnerships  in the amount of  approximately  $25,000 was offset  against prior
years' losses not taken. As of June 30, 2000, the Partnership has not recognized
approximately  $9,034,000 of its allocated cumulative share of losses from seven
Local Limited Partnerships in which its investment has been reduced to zero. The
Partnership's  allocated  cumulative  share of losses in the five Local  Limited
Partnerships  foreclosed  on  during  the six  months  ended  June 30,  2000 was
approximately $9,212,000.

No working capital  advances or repayments were made between the Partnership and
the Local Limited  Partnerships for the six months ended June 30, 2000 and 1999.
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.

Advances  to the  Local  Limited  Partnership  remain  due  and  payable  to the
Partnership.  Interest is calculated at the Chase Manhattan Bank prime rate plus
2% (11.50% at June 30,  2000).  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.  Any future  repayment of advances or interest
will be reflected as Partnership income when received.

The following are combined statements of operations for the three and six months
ended June 30, 2000 and 1999, respectively, of the Local Limited Partnerships in
which the Partnership  has invested.  The statements are compiled from financial
statements of the Local Limited  Partnerships,  prepared on the accrual basis of
accounting,  as  supplied  by the  managing  agents  of the  projects,  and  are
unaudited.

                        COMBINED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>

                                         Three Months Ended         Six Months Ended
                                              June 30,                  June 30,
                                          2000         1999           2000         1999
                                           (in thousands)            (in thousands)

<S>                                    <C>           <C>          <C>          <C>
Rental income                          $  1,940      $  2,964     $  3,927     $  5,902
Other income                                 89           116          155          225
   Total income                           2,029         3,080        4,082        6,127

Operating expenses                        1,161         1,831        2,556        3,732
Interest, taxes, and insurance              484           813        1,051        1,666
Depreciation                                391           486          791          959

   Total expense                          2,036         3,130        4,398        6,357

Net loss                              $      (7)     $    (50)    $   (316)    $   (230)

National Housing Partnership
   Realty Fund Two share of losses    $      (8)     $    (55)    $   (313)    $   (234)
</TABLE>

(3) TRANSACTIONS WITH THE GENERAL PARTNER

During the six month  periods  ended  June 30,  2000 and 1999,  the  Partnership
accrued  administrative and reporting fees payable to the General Partner in the
amount of approximately $36,000 and $69,000, respectively, for services provided
to the  Partnership.  The  amount  of fees  due to the  General  Partner  by the
Partnership was approximately $1,256,000 at June 30, 2000.

No working capital  advances or repayments were made during the six months ended
June 30, 2000.  During the six months ended June 30, 1999, the Partnership  paid
the General Partner  approximately $34,000 and $3,000 for repayment of a working
capital advance and accrued interest on the advance, respectively.

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.

(4)   NOTES PAYABLE

The notes payable by the  Partnership  bear simple interest at a rate of 10% per
annum.  The notes are  payable to NHP in the same amount and same terms as notes
executed  by  NHP  to  former  project   owners,   are   nonrecourse,   and  are
collateralized by the Partnership's  interests in Windsor Apartments  Associates
Limited Partnership and Kimberton Apartments Associates Limited Partnership. The
notes were both due on October 24, 1999. The Partnership is currently in default
of these notes and has  received  notification  from the holders of the notes of
their intent to initiate foreclosure proceedings.

(5) SEGMENT INFORMATION

The Partnership has only one reportable  segment.  Due to the very nature of the
Partnership's  operations,  the  General  Partner  believes  that  segment-based
disclosures will not result in a more meaningful presentation than the financial
statements as currently presented.

(6) LEGAL PROCEEDINGS

In 1997, NHP received subpoenas from the HUD Inspector General ("IG") requesting
documents relating to arrangements whereby NHP or any of its affiliates provided
compensation to owners of HUD-assisted or HUD-insured  multi-family  projects in
exchange for or in connection with property management of a HUD project. In July
1999, NHP received a grand jury subpoena  requesting  documents  relating to the
same  subject  matter as the HUD IG  subpoenas  and NHP's  operation  of a group
purchasing  program created by NHP, known as Buyers Access. To date, neither the
HUD IG nor the grand jury has  initiated  any action  against  NHP or  Apartment
Investment and Management Company ("AIMCO"),  the ultimate controlling entity of
NHP or, to NHP's or AIMCO's  knowledge,  any owner of a HUD property  managed by
NHP. AIMCO believes that NHP's operations and programs are in compliance, in all
material respects, with all laws, rules and regulations relating to HUD-assisted
or HUD-insured properties. NHP and AIMCO are cooperating with the investigations
and do not believe  that the  investigations  will result in a material  adverse
impact on their operations.  However, as with any similar  investigation,  there
can be no assurance that these will not result in material  fines,  penalties or
other costs.

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

(7)   GOING CONCERN

The  Partnership's  note  payable and certain of the Local  Partnership's  notes
payable  are  past  due  (see  Notes  2  and  4).   Continuation  of  the  Local
Partnerships'  operations  in the present  form is  dependent  on its ability to
extend the maturity date of these notes,  or to repay or to refinance the notes.
These  conditions raise  substantial  doubt about their ability to continue as a
going concern.  The financial  statements do not include any  adjustments  which
might result from the outcome of this uncertainty.

ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS

The  matters  discussed  in this Form  10-QSB  contain  certain  forward-looking
statements  and  involve  risks and  uncertainties  (including  changing  market
conditions,   competitive  and  regulatory   matters,   etc.)  detailed  in  the
disclosures  contained  in this  Form  10-QSB  and the  other  filings  with the
Securities and Exchange Commission made by the Registrant from time to time. The
discussion of the  Registrant's  business and results of  operations,  including
forward-looking  statements  pertaining  to such  matters,  does not  take  into
account the effects of any changes to the  Registrant's  business and results of
operations.  Accordingly,  actual  results  could differ  materially  from those
projected in the forward-looking  statements as a result of a number of factors,
including those identified herein.

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, 2000, the Partnership retained an interest in ten 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.

No working capital  advances or repayments were made between the Partnership and
the Local Limited Partnerships during the six months ended June 30, 2000. During
the six months ended June 30, 1999,  the  Partnership  paid the General  Partner
approximately  $34,000 and $3,000 for repayment of a working capital advance and
accrued interest on the advance, respectively.

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
seven of the remaining ten Local Limited  Partnerships  had been reduced to zero
as of June 30, 2000.  For these  investments,  cash  distributions  received are
recorded in income as  distributions  received in excess of  investment in Local
Limited Partnerships.  For those investments not reduced to zero,  distributions
received are recorded as  distributions  from Local Limited  Partnerships.  Cash
distributions of approximately $5,000 and $61,000 from Local Limited Partnership
were received during the six months ended June 30, 2000 and 1999,  respectively.
The receipt of  distributions in future quarters and years 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.  One of these investments,  Harold House Limited Partnership, has a
deferred  acquisition  note that is in  default.  If the holder of the  deferred
acquisition  note exercises its option of foreclosure  (see  discussion  below),
this investment will be reduced to zero.

Net cash used in operations  for the six months ended June 30, 2000 and 1999 was
approximately $7,000 and $24,000, respectively.

The Partnership has no cash and cash equivalents at June 30, 2000 as compared to
approximately  $2,000  at  December  31,  1999.  The  decrease  in cash and cash
equivalents is due to cash used in operating activities and was partially offset
by distributions from Local Limited Partnership.  The ability of the Partnership
to meet its  on-going  cash  requirements  in excess of cash on hand at June 30,
2000 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.  Cash on hand at June
30, 2000 plus any distributions  from the underlying  operations of the combined
Local Limited  Partnerships is expected to adequately fund the operations of the
Partnership in the current year. However,  there can be no assurance that future
distributions will be adequate to fund the operations beyond the current year.

The Partnership currently owes the General Partner approximately  $1,256,000 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.

Each Local  Limited  Partnership,  with the  exception of  Kimberton  Apartments
Associates  Limited  Partnership  and  Windsor  Apartments   Associates  Limited
Partnership in which the  Partnership  currently  holds an interest,  has a note
payable due to the original owner of each  Property.  With the exception of West
Oak Village Limited Partnership,  these notes are all past due and are currently
in default.  West Oak Village Limited Partnership is currently in default due to
non-payment of required annual interest payments for 1999 (see below). The notes
related to Kimberton Apartments  Associates and Windsor Apartments Associates of
approximately $1,254,000 and $1,160,000, respectively, are collateralized by the
Partnership's  interest in these two Local Limited  Partnerships and were due on
October 24, 1999. The Partnership is currently in default on these notes and has
received  notification from the holders of the notes of their intent to initiate
foreclosure  proceedings.  These notes are secured by both the Partnership's and
NHP's interests in the applicable Local Limited Partnerships.  In the event of a
default on the notes,  the note  holders  would be able to assume  NHP's and the
Partnership's interests in the Local Limited Partnerships.

The West Oak Village Limited  Partnership  note bears interest at the rate of 9%
per annum. The note is nonrecourse and is secured by a security  interest in the
Partnership's  interest  in the Local  Limited  Partnership.  During  1997,  the
noteholders  entered into an  agreement  with the  Partnership,  under which the
maturity date of the note was extended  until  November  2013,  assuming  annual
payments  of  interest  are  made to the  noteholders.  Under  the  terms of the
agreement,  payments  are to be made equal to the annual  interest at a variable
rate based on the prior  year's  interest  rate payment  multiplied  by the most
recent Consumer Price Index rate, with any increase subject to a floor of 2% and
a ceiling of 5%. At any time prior to the note's  maturity,  the Partnership has
the option to pay off the  acquisition  note at a  discount  equal to 70% of the
property's annual scheduled rent but not less than $700,000. The required annual
installment   of  interest  for  1999,   pursuant  to  the  agreement  with  the
noteholders,  was not  made.  Accordingly,  the  Local  Limited  Partnership  is
currently  in  default  on  the  required  annual  interest   payments  and  the
Partnership  interests are subject to potential  foreclosure.  The Local Limited
Partnership is actively attempting to sell its net assets.

Caroline Arms, Harold House, Hilltop, Hurbell I, Hurbell II, Hurbell III and San
Juan Del Centro Limited  Partnerships  all 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,  November  15, 1999,  November 2, 1999,
December  19, 1999,  November 2, 1999,  December 19, 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.  Caroline  Arms,  Harold House,  Hilltop and Hurbell I Local Limited
Partnerships are all actively attempting to sell their respective net assets.

Esbro,  Mayfair  Manor,  Park Avenue West I, Park Avenue West II and Rodeo Drive
Limited  Partnership  all had notes  payable  which were due October  15,  1997,
October 15, 1997,  December  20,  1999,  December 20, 1999 and December 6, 1997,
respectively.  The Local Limited  Partnerships did not have the resources to pay
the amounts due. During January 2000, the holders of the notes payable  relating
to Esbro, Mayfair Manor, Park Avenue West I, Park Avenue West II and Rodeo Drive
Limited  Partnership  properties  exercised  their  remedies  under the security
agreement  with respect to such note payable,  and were  substituted as the sole
limited  partner of the  applicable  Local Limited  Partnership  in place of the
Partnership  and such note  holder's  assignee  was  substituted  as the general
partner.  No gain or loss has been  recorded as a result of the transfer of this
partnership  interest.  With the loss of the  Partnership's  interest  in Esbro,
Mayfair  Manor,  Park  Avenue West I, Park Avenue West II and Rodeo Drive to the
note holders,  the  Partnership  will not receive any future benefits from these
Local Limited  Partnerships  and taxable  income through the date of foreclosure
will be generated  and  allocated  to the  Partnership's  investors  without any
distributable cash. The specific impact of the tax consequence is dependent upon
each specific partner's individual tax situation.

Meadows  Apartments and Meadows East Apartments  Limited  Partnerships  both had
notes  payable  which  were  due  on  December  12,  1997.   The  Local  Limited
Partnerships did not have the resources to pay the amounts due. Effective August
5, 1999 and December 1, 1999,  Meadows  Apartments  and Meadows East  Apartments
Limited  Partnership  properties were foreclosed upon.  Pursuant to the security
agreement  of the note  payable,  the note  holder was  substituted  as the sole
limited partner of the Local Limited Partnership in place of the Partnership and
the note holder's  assignee was substituted as the general  partner.  No gain or
loss has been recorded as a result of the transfer of this partnership interest.
With the loss of the  Partnership's  interest in Meadows  Apartments and Meadows
East Apartments to the note holders, the Partnership will not receive any future
benefits from these Local Limited Partnerships.

As a result of the 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, 2000, the
Partnership continued to hold an interest in ten 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, 2000, the Partnership had no
carrying  basis  in  seven  of the  Local  Limited  Partnerships  and  therefore
reflected  no results  of  operations,  for its share of losses for these  Local
Limited Partnerships.

The  Partnership  had a net loss of  approximately  $131,000  for the six months
ended June 30, 2000, compared to net income of approximately $26,000 for the six
months  ended June 30, 1999.  The  Partnership  had a net loss of  approximately
$36,000  for the three  months  ended June 30,  2000,  compared to net income of
approximately  $82,000  for the three  months  ended June 30,  1999.  Net (loss)
income per unit of limited partnership is $(7) compared to $1 for the 18,285 and
18,300 units outstanding at June 30, 2000 and 1999,  respectively.  The increase
in net loss was primarily attributable to decreases in the share of profits from
Local Limited  Partnerships and interest income from Local Limited  Partnerships
partially  offset by an increase in  distributions  in excess of  investment  in
Local Limited Partnerships and decreases in costs and expenses.  The Partnership
did not recognize  approximately  $367,000 of its allocated share of losses from
ten Local  Limited  Partnerships  for the six months ended June 30, 2000, as the
Partnership's  net carrying basis in these Local Limited  Partnerships  had been
reduced to zero. In addition the  Partnership  did not  recognize  approximately
$25,000  of its  allocated  share  of  profits  from  one of the  Local  Limited
Partnerships  for the six months  ended  June 30,  2000 as the  Partnership  had
cumulative   unrecognized   losses  with  respect  to  that  one  Local  Limited
Partnerships.   The  Partnership's  share  of  losses  from  the  Local  Limited
Partnerships,  if not  limited to its  investment  account  balance,  would have
decreased  approximately  $76,000 between periods. The decrease is primarily the
result of the loss of the Partnership's  interests in the Meadows Apartments and
Meadows East Apartments Limited  Partnerships in 1999 and Esbro,  Mayfair,  Park
Avenue West I, Park Avenue West II and Rodeo Drive Limited  Partnerships  during
the six months ended June 30, 2000 due to foreclosures.

                           PART II - OTHER INFORMATION

ITEM 1      LEGAL PROCEEDINGS

In 1997, NHP received subpoenas from the HUD Inspector General ("IG") requesting
documents relating to arrangements whereby NHP or any of its affiliates provided
compensation to owners of HUD-assisted or HUD-insured  multi-family  projects in
exchange for or in connection with property management of a HUD project. In July
1999, NHP received a grand jury subpoena  requesting  documents  relating to the
same  subject  matter as the HUD IG  subpoenas  and NHP's  operation  of a group
purchasing  program created by NHP, known as Buyers Access. To date, neither the
HUD IG nor the grand jury has  initiated  any action  against  NHP or  Apartment
Investment and Management Company ("AIMCO"),  the ultimate controlling entity of
NHP or, to NHP's or AIMCO's  knowledge,  any owner of a HUD property  managed by
NHP. AIMCO believes that NHP's operations and programs are in compliance, in all
material respects, with all laws, rules and regulations relating to HUD-assisted
or HUD-insured properties. NHP and AIMCO are cooperating with the investigations
and do not believe  that the  investigations  will result in a material  adverse
impact on their operations.  However, as with any similar  investigation,  there
can be no assurance that these will not result in material  fines,  penalties or
other costs.

ITEM 6      EXHIBITS AND REPORTS ON FORM 8-K

            a)    Exhibits

                  Exhibit 27, Financial Data Schedule

            b)    Reports on Form 8-K:

                  None filed during the quarter ended June 30, 2000.

                                   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/Martha L. Long
                                          Martha L. Long
                                          Senior Vice President and
                                          Controller

                                    Date: August 14, 2000