UNITES 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 September 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 0-14457


                    NATIONAL HOUSING  PARTNERSHIP REALTY FUND III
             (Exact Name of Registrant as Specified in Its Charter)



           Maryland                                              52-1394972
(State or other jurisdiction of                               (I.R.S. Employer
 incorporation or organization)                              Identification No.)

                         55 Beattie Place, P.O. Box 1089
                        Greenville, South Carolina 29602
                    (Address of principal executive offices)

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


                         PART I - FINANCIAL INFORMATION


ITEM 1.     FINANCIAL STATEMENTS


                    NATIONAL HOUSING PARTNERSHIP REALTY FUND III

                                  Balance Sheet
                                   (Unaudited)
                        (in thousands, except unit data)

                               September 30, 2003



ASSETS
   Cash and cash equivalents                                          $ 633
   Accounts receivable                                                  343
   Investment in Local Limited Partnership                              132
                                                                     $1,108
LIABILITIES AND PARTNERS' (DEFICIENCY) EQUITY
Liabilities
   Administrative and reporting fees payable to
    General Partner                                                    $ 4
   Accrued expenses                                                      33
                                                                         37

Partners' (deficiency) equity
   General Partner -- The National Housing
      Partnership (NHP)                                                 (84)
   Original Limited Partner -- 1133 Fifteenth
      Street Three Associates                                           (88)
   Other Limited Partners -- 11,199 investment units                  1,243
                                                                      1,071
                                                                     $1,108

                   See Accompanying Notes to Financial Statements



<PAGE>



                    NATIONAL HOUSING PARTNERSHIP REALTY FUND III
                            Statements of Operations
                                   (Unaudited)
                      (in thousands, except per unit data)

<TABLE>
<CAPTION>


                                       Three Months Ended         Nine Months Ended
                                          September 30,             September 30,
                                       2003          2002          2003         2002
Revenues:
  Equity income from investment
<S>                                   <C>           <C>           <C>          <C>
   in Local Limited Partnership       $    --       $    --       $   132      $    --
  Distribution in excess of
   investment in Local Limited
   Partnership                             --            20            --      $    20
  Interest income                          --             1             1            2
                                           --            21           133           22
costs and expenses:
  Equity loss from investment
   in Local Limited Partnership             1            --            --            1
  Administrative and reporting
    fees to General Partner                 2             1             4            4
  Other operating expenses                 23            11            47           39
                                           26            12            51           44

Net (loss) income                      $ (26)         $ 9         $    82      $   (22)

Allocation of net (loss) income:
  General Partner - NHP                $ --          $ --         $     1      $    --
  Original Limited Partner --
  1133 Fifteenth Street Three
  Associates                               --            --             1           --
  Other Limited Partners                  (26)            9            80          (22)

                                       $ (26)         $ 9         $    82      $   (22)
Net (loss) income per other
  limited partnership interest        $ (2.31)       $ .79        $  7.11      $ (1.95)


                   See Accompanying Notes to Financial Statements
</TABLE>


<PAGE>



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

<TABLE>
<CAPTION>


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

(Deficiency) equity at
<S>         <C> <C>                   <C>           <C>          <C>          <C>
   December 31, 2002                  $ (85)        $ (89)       $1,163       $ 989

Net income for the nine months
   ended September 30, 2003               1             1            80           82

(Deficiency) equity at
   September 30, 2003                 $ (84)        $ (88)       $1,243       $1,071

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


(A)   General Partner
(B)   Original Limited Partner
(C)   Consists  of 11,199  investment  units at  September  30,  2003 and 11,254
      investment  units at  December  31,  2002.  During the nine  months  ended
      September 30, 2003, 55 units were abandoned (Note 6).


                   See Accompanying Notes to Financial Statements
</TABLE>

<PAGE>


                    NATIONAL HOUSING PARTNERSHIP REALTY FUND III
                            Statements of Cash Flows
                                   (Unaudited)
                                 (in thousands)

<TABLE>
<CAPTION>

                                                                 Nine Months Ended
                                                                   September 30,
                                                                   2003       2002
CASH FLOWS FROM OPERATING ACTIVITIES:
<S>                                                               <C>          <C>
   Interest received                                              $ 1          $ 2
   Distribution in excess of investment in Local
     Limited Partnership                                             --          20
   Payment of administrative and reporting fees                      --         (21)
   Operating expenses paid                                          (14)        (14)
   Net cash used in operating activities                            (13)        (13)

CASH FLOWS FROM INVESTING ACTIVITIES:
   Distributions from Local Limited Partnership recognized
    as return of capital                                            --          651

CASH FLOWS FROM FINANCING ACTIVITIES:
   Withholding taxes paid for limited partners                       (1)       (192)

NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS                (14)        446

CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD                      647         238

CASH AND CASH EQUIVALENTS, END OF PERIOD                         $ 633        $ 684

RECONCILIATION OF NET INCOME (LOSS) TO NET CASH
   USED IN OPERATING ACTIVITIES:
     Net income (loss)                                            $ 82        $ (22)

     Adjustments to reconcile net income (loss) to
      net cash used in operating activities:
      Equity (income) loss from investment in Local
        Limited Partnership                                        (132)          1
      Increase (decrease) in administrative and reporting
        fees payable                                                  4         (16)
      Increase in accrued expenses                                   33          24

          Total adjustments                                         (95)          9

     Net cash used in operating activities                       $ (13)       $ (13)


                   See Accompanying Notes to Financial Statements
</TABLE>


<PAGE>

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


(1)   ACCOUNTING POLICIES

Organization

National  Housing   Partnership  Realty  Fund  III  (the  "Partnership"  or  the
"Registrant")  is a limited  partnership  organized  under the Maryland  Revised
Uniform Limited  Partnership Act on May 10, 1985. The Partnership was formed for
the purpose of raising  capital by  offering  and  selling  limited  partnership
interests and then investing in Local Limited Partnerships, each of which either
owns and operates an existing  rental  housing  project or has acquired  limited
partnership  interests in partnerships which own and operate one or two existing
rental housing  projects.  All such rental housing  projects are 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 June 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
11,500  interests at a price of $1,000 per  interest.  During 1985,  the sale of
interests was terminated after the sale of 11,500 interests. As of September 30,
2003, 11,199 limited partnership interests were outstanding.

On June 3, 1997,  Apartment Investment and Management Company, a publicly traded
real estate  investment  trust ("AIMCO" and,  together with its subsidiaries and
other controlled  entities,  the "AIMCO Group"),  acquired all of the issued and
outstanding  capital stock of NHP Partners,  Inc., a Delaware  corporation ("NHP
Partners"), and the AIMCO Group acquired all of the outstanding interests in NHP
Partners Two Limited Partnership,  a Delaware limited partnership ("NHP Partners
Two").  NHP Partners owns all of the  outstanding  capital stock of the National
Corporation  for  Housing  Partnerships,  a  District  of  Columbia  corporation
("NCHP"),  which is the general partner of NHP. Together,  NCHP and NHP Partners
Two own all of the outstanding  partnership interests in NHP. NHP is the general
partner of the Partnership.  As a result of these transactions,  the AIMCO Group
has acquired control of the general partner of the Partnership  and,  therefore,
may be deemed to have acquired control of the Partnership.

The Original  Limited Partner of the Partnership is 1133 Fifteenth  Street Three
Associates,  whose  limited  partners were key employees of NCHP at the time the
Partnership was formed and whose general partner 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  nine  months  ended  September  30,  2003  are not
necessarily  indicative  of the results that may be expected for the fiscal year
ended 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 October 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. 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 cash  flow,  the
Partnership cannot make any definitive  conclusion on the impact on net earnings
until it completes its evaluation,  including an evaluation of the Partnership's
maximum exposure to loss.

In May 2003,  the FASB issued SFAS 150, which  establishes  standards for how an
issuer   classifies   and   measures   certain   financial    instruments   with
characteristics  of both  liabilities and equity.  The  requirements of SFAS 150
apply  to  the   classification   and  measurement  of  freestanding   financial
instruments.  SFAS 150 is effective  for financial  instruments  entered into or
modified  after May 31, 2003, and otherwise is effective at the beginning of the
first interim period  beginning after June 15, 2003. The Partnership has adopted
SFAS 150 as of July 1, 2003.  Additionally,  in September  2003,  the FASB staff
indicated  that  SFAS 150  also  applies  to the  non-controlling  interests  in
consolidated  finite life partnerships.  However,  on October 29, 2003, the FASB
indefinitely  deferred the provisions of SFAS 150 for finite life  partnerships.
The  adoption  of SFAS 150 did not have a material  impact on the  Partnership's
results of operations taken as a whole.

(2)   INVESTMENTS IN AND ADVANCES TO LOCAL LIMITED PARTNERSHIPS

At September 30, 2003, the Partnership owns a 94.5% limited partnership interest
(98% with respect to  allocation  of losses) in one Local  Limited  Partnership,
Edmond Estates  Limited  Partnership.  The  Partnership  also owns a 99% limited
partnership interest in Meadowood Townhouses III Limited Partnership. This Local
Limited  Partnership  owned a 99% limited  partnership  interest in an operating
limited  partnership  which held title to one rental housing  property which was
sold in 2001. The  Partnership's  effective  interest in this operating  limited
partnership  is  98.01%.  Once  the  remaining  cash  of the  operating  limited
partnership  and the  Local  Limited  Partnership  is  disbursed,  they  will be
dissolved.

Since the Partnership does not exercise control over the activities of the Local
Limited  Partnerships  in  accordance  with  the  partnership  agreements,   the
Partnership's  investments are accounted for using the equity method.  Thus, the
investments  are  carried  at cost  plus the  Partnership's  share of the  Local
Limited  Partnerships' profits less the Partnership's share of the Local Limited
Partnerships losses and distributions. However, since the Partnership is neither
legally  liable  for the  obligations  of the Local  Limited  Partnerships,  nor
otherwise committed to provide additional support to them, it does not recognize
losses  once  its  investment,   reduced  for  its  share  of  losses  and  cash
distributions,   reaches  zero  in  each  of  the   individual   Local   Limited
Partnerships.  As a result,  the  Partnership  did not  recognize  approximately
$36,000 and  $46,000 of its  allocated  share of losses  from one Local  Limited
Partnership   during  the  nine  months  ended  September  30,  2003  and  2002,
respectively.  As of September  30, 2003,  the  Partnership  had not  recognized
approximately  $2,541,000 of its allocated  share of cumulative  losses from one
Local Limited Partnership in which its investment is zero.

With  the  sale of the  property  owned  by  Meadowood  Townhouses  III  Limited
Partnership,  the Partnership's  share of income for the year ended December 31,
2001  was  sufficient  to  both  recover  prior  years'  losses  not  previously
recognized  and to result in equity  income in  investment  in the Local Limited
Partnership.  At December 31, 2001,  the  Partnership  had an  investment in the
Local Limited  Partnership  of  approximately  $652,000  which  represented  the
residual cash from the sale of the property  owned by Meadowood  Townhouses  III
Limited  Partnership.  During the year ended December 31, 2002 the Local Limited
Partnership recognized  approximately $25,000 in equity loss and the Partnership
received a distribution of approximately  $627,000 from Meadowood Townhouses III
Limited  Partnership  which  reduced the  Partnership's  investment in the Local
Limited  Partnership to zero.  During the nine months ended  September 30, 2003,
the Partnership  recognized equity income from the Local Limited  Partnership of
approximately  $132,000  and  increased  its  investment  in the  Local  Limited
Partnership  by the same  amount.  The increase in the  investment  in the Local
Limited  Partnership  was the result of an additional gain on sale recognized by
Meadowood  Townhouses  III  Limited  Partnership  during the nine  months  ended
September  30,  2003.  The gain on sale was the  result of accrued  legal  fees,
originally  established  based on estimates in 2001, which were determined to be
unneeded by the Local Limited Partnership in 2003.

Edmond  Estates  Limited  Partnership  has a  note  which  was  executed  by the
respective Limited Partnership with the seller as part of the acquisition of the
property  by the  Local  Limited  Partnership.  The note is  nonrecourse  and is
subordinated to the respective  mortgage note on the property for as long as HUD
insures the mortgage note. Any payments due from project income are payable from
surplus  cash,  as defined by the HUD  Regulatory  Agreement.  Neither the Local
Limited  Partnership  nor any  partner  thereof,  present or future,  assume any
personal  liability  for the  payment of the note.  The note was due in December
1999 for Edmond Estates Limited  Partnership.  Regarding  Edmond Estates Limited
Partnership,  interest  continues to be accrued under the original  terms of the
note  agreement.  The  note is in  default  and the  Local  Limited  Partnership
interest is subject to foreclosure. The property is currently being marketed for
sale,  but there is no guarantee  that the property will sell or, if sold,  that
the sale  transaction  will  generate  sufficient  proceeds  to pay the  accrued
interest and principal of the note. The financial  statements do not include any
adjustments which might result from the outcome of this uncertainty.

Advances made by the  Partnership to the individual  Local Limited  Partnerships
are  considered   part  of  the   Partnership's   investment  in  Local  Limited
Partnerships.  When advances are made,  they are charged to operations as a loss
on investment in the Local Limited  Partnership  using  previously  unrecognized
cumulative  losses. As discussed above, due to the cumulative losses incurred by
the Local  Limited  Partnership,  the  aggregate  balance of  investment  in and
advances to one Local Limited  Partnership has been reduced to zero at September
30,  2003.  To the  extent  these  advances  are  repaid  by the  Local  Limited
Partnership in the future,  the repayments will be credited as distributions and
repayments received in excess of investment in Local Limited Partnership.  These
advances  are  carried  as a payable  to the  Partnership  by the Local  Limited
Partnership  and at September 30, 2003,  the balance is  approximately  $31,000.
Interest  is  calculated  at the JP  Morgan  Chase  prime  rate plus 2% or 6% at
September 30, 2003.  Payment of principal  and interest is  contingent  upon the
Local  Limited  Partnership  having  available  surplus  cash, as defined by HUD
regulations,  from operations,  or from refinancing or sale of the Local Limited
Partnership  property.  Any future  repayment  of advances  or interest  will be
reflected as partnership income when received.

During the nine months ended  September  30, 2003,  no advances were made by the
General Partner to the Local Limited Partnerships.  During the nine months ended
September 30, 2002, the General Partner advanced approximately $57,000 to one of
the Local Limited Partnerships to fund partnership entity expenses.  The balance
owed to the General  Partner by the Local Limited  Partnerships at September 30,
2003 is  approximately  $68,000.  Interest  is charged at prime plus 2% or 6% at
September 30, 2003.

The accompanying combined statements of operations have been restated to reflect
the operations of Meadowood  Townhouses III Limited  Partnership as discontinued
operations due to its sale in October 2001.

The  following  are combined  statements  of  operations  for the three and nine
months ended  September  30, 2003 and 2002,  respectively,  of the Local Limited
Partnerships in which the Partnership has invested.

<TABLE>
<CAPTION>

                        COMBINED STATEMENTS OF OPERATIONS

                                      Three Months Ended         Nine Months Ended
                                         September 30,             September 30,
                                      2003          2002         2003         2002
                                        (in thousands)             (in thousands)
                                                 (restated) (restated)

<S>                                  <C>           <C>           <C>         <C>
Rental income                        $ 137         $ 134         $ 413       $ 382
Other income                              6             5            14          15
Casualty gain                            --            --             6          --
   Total income                         143           139           433         397

Operating expenses                      102            89           304         286
Interest, taxes, and insurance           36            34           107         102
Depreciation                             18            18            59          55
   Total expense                        156           141           470         443

Loss from continuing
 operations                             (13)           (2)          (37)        (46)
Loss from discontinued
 operations                              (1)            1            --          (1)
Gain on sale of discontinued
 operations                              --            --           135          --
Net (loss) income                    $ (14)         $ (1)        $ 98        $ (47)
National Housing Partnership
  Realty Fund III share of
   (loss) income                     $ (14)         $ (1)        $ 96        $ (46)
</TABLE>

(3)   TRANSACTIONS WITH THE GENERAL PARTNER

During the nine  months  ended  September  30,  2003 and 2002,  the  Partnership
accrued  administrative  and reporting fees to the General Partner in the amount
of approximately  $4,000 for services  provided to the  Partnership.  During the
nine months  ended  September  30,  2002,  the  Partnership  paid to the General
Partner  approximately  $21,000 in accrued fees. No such payment was made during
the  corresponding  period in 2003. The amount due to the General Partner by the
Partnership for  administrative  and reporting fees was approximately  $4,000 at
September 30, 2003.

The  advances  and accrued  administrative  and  reporting  fees  payable to the
General  Partner  will be paid as cash flow permits or from  proceeds  generated
from the sale or  refinancing  of the  remaining  property of the Local  Limited
Partnership.

(4)   GOING CONCERN

The remaining Local Limited  Partnership's note payable was due during 1999 (see
Note 2). The note is in default and the Local  Limited  Partnership  interest is
subject to  foreclosure.  The property is currently being marketed for sale, but
there is no  guarantee  that the property  will sell or, if sold,  that the sale
transaction  will generate  sufficient  proceeds to pay the accrued interest and
principal of the note. The financial  statements do not include any  adjustments
which might result from the outcome of this uncertainty.

(5)   LEGAL PROCEEDINGS

The  Partnership  is unaware of any pending or  outstanding  litigation  matters
involving it or its investments  that are not of a routine nature arising in the
ordinary course of business.

(6) ABANDONMENT OF LIMITED PARTNERSHIP UNITS

During  the nine  months  ended  September  30,  2003,  the  number  of  Limited
Partnership Units decreased by 55 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 Limited Partnership Unit in
the  accompanying  statements of operations is calculated based on the number of
units  outstanding at the beginning of the year. There were no such abandonments
during the nine months ended September 30, 2002.


<PAGE>




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

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

LIQUIDITY AND CAPITAL RESOURCES

Edmond Estates  Limited  Partnership  has a note which was executed by the Local
Limited  Partnership  with the seller as part of the acquisition of the property
by the Local Limited Partnership. This note is secured by both the Partnership's
and the General Partner's interests in the Local Limited  Partnership.  The note
is nonrecourse  and is  subordinated to the mortgage note on the property for as
long as HUD insures the mortgage  note. Any payments due from project income are
payable from surplus cash, as defined by the HUD Regulatory  Agreement.  Neither
the Local Limited Partnership nor any partner thereof, present or future, assume
any personal liability for the payment of the note. The note was due in December
1999.  Interest  continues to be accrued  under the  original  terms of the note
agreement.  The note is in default and the Local Limited Partnership interest is
subject to  foreclosure.  The property is currently being marketed for sale, but
there can be no assurance  that the property  will sell or, if it is sold,  that
the sale  transaction  will  generate  sufficient  proceeds  to pay the  accrued
interest and principal of the note. The financial  statements do not include any
adjustments which might result from the outcome of this  uncertainty.  Meadowood
Townhouses  III  Limited  Partnership  had a  note  which  was  executed  by the
respective Local Limited  Partnership with the seller as part of the acquisition
of the property by the Local Limited  Partnership.  The note was nonrecourse and
was subordinated to the respective mortgage note on the property.  With the sale
of the property during 2001 and the full payment of the mortgage note, a portion
of remaining  proceeds  were used to make a payment on the deferred  acquisition
note.  The holder of this note  accepted a discount on the note as the  proceeds
were not sufficient to fully satisfy the unpaid amount at the time of the sale.

The  Partnership's  liquidity  based on cash and cash  equivalents  decreased to
approximately  $633,000 at September 30, 2003 compared to approximately $647,000
at December 31, 2002. The decrease was due to payment of  Partnership  operating
expenses  and  non-resident  withholding  taxes for the limited  partners of the
Partnership.  The Partnership's  existing cash plus any  distributions  from the
underlying   operations  of  the  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 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.

Advances made by the  Partnership to the individual  Local Limited  Partnerships
are  considered   part  of  the   Partnership's   investment  in  Local  Limited
Partnerships.  When advances are made,  they are charged to operations as a loss
on investment in the Local Limited  Partnership.  Due to the  cumulative  losses
incurred by the Local Limited  Partnership,  the aggregate balance of investment
in and advances to this Local  Limited  Partnership  has been reduced to zero at
September 30, 2003. To the extent these advances are repaid by the Local Limited
Partnership in the future,  the repayments will be credited as distributions and
repayments received in excess of investment in Local Limited Partnership.  These
advances  are  carried  as a payable  to the  Partnership  by the Local  Limited
Partnership  and at  September  30, 2003 the balance is  approximately  $31,000.
Interest  is  calculated  at the JP  Morgan  Chase  prime  rate plus 2% or 6% at
September 30, 2003.  Payment of principal  and interest is  contingent  upon the
Local  Limited  Partnership  having  available  surplus  cash, as defined by HUD
regulations,  from operations,  or from refinancing or sale of the Local Limited
Partnership's  property.  Any future  repayment of advances or interest  will be
reflected as partnership income when received.

During the nine months ended  September  30, 2003,  no advances were made by the
General Partner to the Local Limited  Partnership.  During the nine months ended
September 30, 2002, the General Partner advanced approximately $57,000 to one of
the Local Limited  Partnerships to pay partnership entity expenses.  The balance
owed to the General  Partner by the Local Limited  Partnership  at September 30,
2003 is  approximately  $68,000.  Interest  is charged at prime plus 2% or 6% at
September 30, 2003.

Distributions   received   from  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,  as of September 30, 2003, the
investment in one Local Limited  Partnership  had been reduced to zero. For this
investment,  cash distributions received are recorded in income as distributions
received  in  excess  of  investment  in  Local  Limited  Partnership.  For  the
investment  not  reduced  to  zero,   distributions  received  are  recorded  as
distributions  from Local  Limited  Partnership.  During the nine  months  ended
September 30, 2002, the  Partnership  received a distribution  of  approximately
$651,000 from Meadowood  Townhouses III Limited Partnership which along with the
equity loss of approximately  $1,000 from the Local Limited  Partnership reduced
the  Partnership's  investment in the Local  Limited  Partnership  to zero.  The
Partnership  also  received a  distribution  in excess of its  investment in the
Local Limited Partnership of approximately $20,000 from Meadowood Townhouses III
Limited  Partnership during the nine months ended September 30, 2003. There were
no cash distributions received during the nine months ended September 30, 2003.

The property in which the Local Limited Partnership has invested receives one or
more forms of assistance  from the Federal  Government.  As a result,  the Local
Limited  Partnership's  ability to transfer funds to the Partnership in the form
of cash  distributions,  loans or  advances  is  generally  restricted  by these
government assistance programs. These restrictions, however, are not expected to
impact the Local Limited Partnership's ability to meet its cash obligations.

RESULTS OF OPERATIONS

The Partnership  retains an investment as a limited partner in two Local Limited
Partnerships with only one that operates one rental housing  property.  In prior
years,  results of operations of the Partnership were significantly  impacted by
the Partnership's share of the losses of the Local Limited  Partnerships.  These
losses included  depreciation  and accrued  deferred  acquisition  note interest
expense, which are non-cash in nature. Because the investment in and advances to
Edmond Estates Limited  Partnership has been reduced to zero, the  Partnership's
share of the  operations  of the Local  Limited  Partnership  is no longer being
recorded.  With  the sale of the  property  owned by  Meadowood  Townhouses  III
Limited  Partnership,  the  Partnership's  share of  income  for the year  ended
December  31,  2001 was  sufficient  to both  recover  prior  years'  losses not
previously  recognized and to result in equity income in investment in the Local
Limited Partnership.  At December 31, 2001, the Partnership had an investment in
the Local Limited  Partnership of approximately  $652,000 which  represented the
residual cash from the sale of the property  owned by Meadowood  Townhouses  III
Limited  Partnership.  During the year ended December 31, 2002 the Local Limited
Partnership recognized  approximately $25,000 in equity loss and the Partnership
received a distribution of approximately  $627,000 from Meadowood Townhouses III
Limited  Partnership  which  reduced the  Partnership's  investment in the Local
Limited  Partnership to zero.  During the nine months ended  September 30, 2003,
the Partnership  recognized equity income from the Local Limited  Partnership of
approximately  $132,000  and  increased  its  investment  in the  Local  Limited
Partnership  by the same  amount.  The increase in the  investment  in the Local
Limited  Partnership  was the result of an additional gain on sale recognized by
Meadowood  Townhouses  III  Limited  Partnership  during the nine  months  ended
September  30,  2003.  The gain on sale was the  result of accrued  legal  fees,
originally  established  based on estimates in 2001, which were determined to be
unneeded by the Local Limited Partnership in 2003.

The  Partnership  had net income of  approximately  $82,000  for the nine months
ended September 30, 2003 compared to a net loss of approximately $22,000 for the
nine  months  ended  September  30,  2002.  The  Partnership  had a net  loss of
approximately  $26,000 for the three months ended September 30, 2003 compared to
net income of approximately $9,000 for the nine months ended September 30, 2002.
Revenues  increased  for the nine  months  ended  September  30,  2003 due to an
increase in equity income from  investment in Meadowood  Townhouses  III Limited
Partnership  partially offset by a decrease in distributions  received in excess
of investment.  Revenues decreased for the three months ended September 30, 2003
due to a  decrease  in  distributions  received  in  excess of  investment.  The
Partnership  received a  distribution  in excess of its  investment in the Local
Limited  Partnership  of  approximately  $20,000 from  Meadowood  Townhouses III
Limited  Partnership  during the three and nine months ended September 30, 2002.
Expenses  increased  slightly for the three and nine months ended  September 30,
2003 due to an increase in Partnership  operating expenses.  The Partnership did
not recognize approximately $36,000 and $46,000 of its allocated share of losses
from one Local Limited  Partnership for the nine months ended September 30, 2003
and  2002,  respectively.  At  September  30,  2003,  the  Partnership  had  not
recognized  approximately $2,541,000 of its allocated share of cumulative losses
from one Local Limited Partnership in which its investment is zero.

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 October 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. 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 cash  flow,  the
Partnership cannot make any definitive  conclusion on the impact on net earnings
until it completes its evaluation,  including an evaluation of the Partnership's
maximum exposure to loss.

In May 2003,  the FASB issued SFAS 150, which  establishes  standards for how an
issuer   classifies   and   measures   certain   financial    instruments   with
characteristics  of both  liabilities and equity.  The  requirements of SFAS 150
apply  to  the   classification   and  measurement  of  freestanding   financial
instruments.  SFAS 150 is effective  for financial  instruments  entered into or
modified  after May 31, 2003, and otherwise is effective at the beginning of the
first interim period  beginning after June 15, 2003. The Partnership has adopted
SFAS 150 as of July 1, 2003.  Additionally,  in September  2003,  the FASB staff
indicated  that  SFAS 150  also  applies  to the  non-controlling  interests  in
consolidated  finite life partnerships.  However,  on October 29, 2003, the FASB
indefinitely  deferred the provisions of SFAS 150 for finite life  partnerships.
The  adoption  of SFAS 150 did not have a material  impact on the  Partnership's
results of operations taken as a whole.

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 September 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 III

                                    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/Paul J. McAuliffe
                                          Paul J. McAuliffe
                                          Executive Vice President
                                          and Chief Financial Officer


                                    Date: November 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 III;

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: November 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 III;

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: November 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 III (the  "Partnership"),  for the quarterly  period ended September
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:  November 12, 2003


                                           /s/Paul J. McAuliffe
                                    Name:  Paul J. McAuliffe
                                    Date:  November 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.