More than two dozen persons spent Friday night and the early morning hours yesterday camped out on the grass at 13th and O streets NW for the beginning of apartment sales at the Iowa, a vacant seven-story apartment building being converted to condominiums.

David Clark Associates Inc., the company developing The Iowa and its surrounding town houses, is offering 42 condominiums for $38,000 to $79,500, and the first eight of 53 town houses for $81,000 to $86,000.

Prospective buyers, faced with spiraling housing costs throughout Washington and particularly in popular inner city neighborhoods like the Logan Circle area in which The Iowa is located, apparently believed the sales prices to be reasonable. Shortly after midnight yesterday, eight prospective purchasers already were there, awaiting the opening of the sales office at 9 a.m.

"I feel like a fool, staying out here all night, but I want it," said a government lawyer who brought an air mattress and a package of cookies.

By the time J. W. Lanum, a 30-year-old transportation planner for the city government, arrived at 7 a.m., he was 30th in line. Lanum who rents an apartment in the Adams Morgan area, said he just happened to be passing by on 13th Street when he saw the crowd on the grass.

"I like Washington, D.C., but the housing market is so tight here, you have to be flexible about where you live," said Lanum, who added that he wanted originally to buy a house in Adams Morgan. But after seeing a shell in that area with an asking price of $45,000, he changed his mind.

The Clark firm bought the long-vacant apartment building from the city's Redevelopment Land Agency, which had bought it in 1970. Over the years, there were various plans, including demolition at one point, but residents successfully fought to save the 78-year-old building.

Sam Brannon, vice president of Clark, said that, although his firm didn't advertise that sales were to begin yesterday, his office received about 175 calls last week.