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 March 31, 1999


[  ] 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
                        (A MARYLAND LIMITED PARTNERSHIP)
       (Exact name of small business issuer as specified in its charter)
       
          Maryland                                               52-1394972
(State or other jurisdiction of                                (IRS Employer
 incorporation or organization)                              Identification No.)

                       9200 Keystone Crossing, Suite 500
                          Indianapolis, Indiana 46240
                    (Address of principal executive offices)

                                 (317) 817-7500
                           Issuer's telephone number


Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter
period that the registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days.  Yes  X  No
                         
                         PART I - FINANCIAL INFORMATION


ITEM 1.   FINANCIAL STATEMENTS

a)
                  NATIONAL HOUSING PARTNERSHIP REALTY FUND III
                        (A MARYLAND LIMITED PARTNERSHIP)
                        STATEMENTS OF FINANCIAL POSITION
                                  (UNAUDITED)

                                 MARCH 31, 1999



ASSETS

  Cash and cash equivalents                               $  598,728

  Investments in and advances to Local Limited

     Partnerships (Note 2)                                        --
                                                          $  598,728

LIABILITIES AND PARTNERS' EQUITY (DEFICIT)

Liabilities:

  Administrative and reporting fee payable to

     General partner (Note 3)                             $  107,810

  Accrued expenses                                            69,833


                                                             177,643
Partners' equity (deficit):

  General Partner--The National Housing

     Partnership (NHP)                                       (91,039)

   Original Limited Partner--1133 Fifteenth

      Street Associates                                      (95,939)

   Other Limited Partners--11,500 investment
      units                                                  608,063

                                                             421,085

                                                          $  598,728


               See Accompanying Notes to Financial Statements

b)
                  NATIONAL HOUSING PARTNERSHIP REALTY FUND III
                        (A MARYLAND LIMITED PARTNERSHIP)
                            STATEMENTS OF OPERATIONS
                                  (UNAUDITED)



                                                        Three Months Ended

                                                            March 31,

                                                         1999       1998

REVENUES:

  Interest income                                    $   6,182   $   6,283

COSTS AND EXPENSES:

  Administrative and reporting fees to

    General Partner                                     21,562      21,562

  Other operating expenses                              18,406      14,374

                                                        39,968      35,936

NET LOSS                                             $ (33,786)  $ (29,653)

NET LOSS ASSIGNABLE TO LIMITED PARTNERS              $ (33,110)  $ (29,059)

NET LOSS PER LIMITED PARTNERSHIP INTEREST            $      (3)  $      (3)


                    See Accompanying Notes to Financial Statements

c)
                  NATIONAL HOUSING PARTNERSHIP REALTY FUND III
                        (A MARYLAND LIMITED PARTNERSHIP)
                    STATEMENTS OF PARTNER'S EQUITY (DEFICIT)
                                  (UNAUDITED)



                                    The National    1133

                                      Housing    Fifteenth    Other

                                    Partnership    Street    Limited

                                       (NHP)     Associates Partners    Total


Equity (deficit) at January 1, 1999  $ (90,701)  $(95,601)  $ 641,173  $454,871


Net loss for the three months ended

  March 31, 1999                          (338)      (338)    (33,110)  (33,786)


Equity (deficit) at March 31, 1999   $ (91,039)  $(95,939)  $ 608,063  $421,085


Percentage interest at

  March 31, 1999                            1%         1%         98%      100%

                                           (A)        (B)         (C)


(A)  General Partner
(B)  Original Limited Partner
(C)  Consists of 11,500 investment units

                      See Accompanying Notes to Financial Statements

d)
                  NATIONAL HOUSING PARTNERSHIP REALTY FUND III
                        (A MARYLAND LIMITED PARTNERSHIP)
                            STATEMENTS OF CASH FLOW
                                  (UNAUDITED)



                                                       Three Months Ended

                                                            March 31,

                                                         1999       1998

CASH FLOWS FROM OPERATING ACTIVITIES:

  Interest received                                  $   6,182   $   6,283

  Operating expenses paid                               (2,289)       (624)

  Net cash provided by operating activities              3,893       5,659

CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD         594,835     538,513

CASH AND CASH EQUIVALENTS, END OF PERIOD             $ 598,728   $ 544,172

RECONCILIATION OF NET LOSS TO NET CASH USED IN

  OPERATING ACTIVITIES:

   Net loss                                          $ (33,786)  $ (29,653)

   Adjustments to reconcile net loss to net cash

   provided by operating activities:

   Increase in administrative and reporting fees

      payable                                           21,562      21,562

   Increase in accrued expenses                         16,117      13,750


     Total adjustments                                  37,679      35,312


Net cash provided by operating activities            $   3,893   $   5,659


                    See Accompanying Notes to Financial Statements


                  NATIONAL HOUSING PARTNERSHIP REALTY FUND III
                         A MARYLAND LIMITED PARTNERSHIP

                         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, inception of operations, the Partnership began raising capital and
acquiring interests in Local Limited Partnerships.

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 all 11,500 interests.

On June 3, 1997, Apartment Investment and Management Company, a Maryland
corporation ("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"). The
acquisitions were made pursuant to a Real Estate Acquisition Agreement, dated as
of May 22, 1997 (the "Agreement"), by and among AIMCO, AIMCO Properties, L.P., a
Delaware limited partnership (the "Operating Partnership"), Demeter Holdings
Corporation, a Massachusetts corporation ("Demeter"), Phemus Corporation, a
Massachusetts corporation ("Phemus"), Capricorn Investors, L.P., a Delaware
limited partnership ("Capricorn"), J. Roderick Heller, III and NHP Partners Two
LLC, a Delaware limited liability company ("NHP Partners Two LLC"). 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 The National Housing Partnership, a District of Columbia
limited partnership ("NHP" or the "General Partner"). Together, NCHP and NHP
Partners Two own all of the outstanding partnership interests in NHP. NHP is the
general partner of the Registrant. As a result of these transactions, the AIMCO
Group has acquired control of the general partner of the Registrant and,
therefore, may be deemed to have acquired control of the Registrant.

The Original Limited Partner of the Partnership is 1133 Fifteenth Street Three
Associates, whose limited partners were key employees of an affiliate of the
Partnership at the time the Partnership was formed and whose general partner is
the sole shareholder of the Partnership's General Partner.

BASIS OF PRESENTATION

The accompanying unaudited interim financial statements reflect all adjustments
which are, in the opinion of management, necessary to 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 NHP Realty Fund III's Annual Report filed in Form 10-K for the year
ended December 31, 1998.

(2)  INVESTMENTS IN AND ADVANCES TO LOCAL LIMITED PARTNERSHIPS

The Partnership owns a 99% limited partnership interest in Brunswick Village
Limited Partnership and 94.5% limited partnership interests (98% with respect to
allocation of losses) in eight other Local Limited Partnerships: Edmond Estates
Limited Partnership, Galion Limited Partnership, Indian Valley I Limited
Partnership, Indian Valley II Limited Partnership, Indian Valley III Limited
Partnership, Kimberly Associates Limited Partnership, Newton Hill Limited
Partnership and Woodmark Limited Partnership.  The Partnership also acquired a
99% interest in Meadowood Townhouses III Limited Partnership which owns a 99%
limited partnership interest in an operating limited partnership which holds
title to one rental housing property. The Partnership's effective interest in
these operating limited partnerships is 98.01%.

Because 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 in Local Limited Partnerships are
accounted for using the equity method. Thus, the investments (and the advances
made to the Local Limited Partnerships as discussed below) 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, because 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 investments,
reduced for its share of losses and cash distributions, reach zero in each of
the individual Local Limited Partnerships. As of December 31, 1996, investments
in the twelve Local Limited Partnerships had been reduced to zero. During the
year ended December 31, 1997, three properties owned by two Local Limited
Partnerships were sold, and as a result the Partnership's investment in these
Local Limited Partnerships is $87,108. The Partnership did not recognize
$196,964 of losses from the remaining ten Local Limited Partnerships during the
three months ended March 31, 1998.  The Partnership did not recognize $76,116 of
losses from these ten Local Limited Partnerships during the three months ended
March 31, 1999.  As of March 31, 1999, the Partnership has not recognized a
total of $15,859,014 of its allocated share of cumulative losses from the Local
Limited Partnerships in which its investment is zero.

Advances made by the Partnership to the individual Local Limited Partnerships
are considered part of the Partnership's investment in Local Limited
Partnerships. When advances are made, they are charged to operations as a loss
on investment in the Local Limited Partnership using previously unrecognized
cumulative losses. As discussed above, due to the cumulative losses incurred by
the Local Limited Partnerships, the aggregate balance of investments in and
advances to the remaining ten Local Limited Partnerships has been reduced to
zero at March 31, 1999. To the extent these advances are repaid by the Local
Limited Partnerships in the future, the repayments will be credited as
distribution and repayments received in excess of investment in Local Limited
Partnerships. These advances are carried as a payable to the Partnership by the
Local Limited Partnerships.

No working capital advances or repayments occurred between the Partnership and
the Local Limited Partnerships during the three months ended March 31, 1999 and
1998. The combined amount carried as due to the Partnership by the Local Limited
Partnerships was $522,159 as of March 31, 1999. Future advances made will be
charged to operations; likewise, future repayments will be credited to
operations.

The following are combined statements of operations for the three months ended
March 31, 1999 and 1998, 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 management agents of the projects, and are
unaudited.

                       COMBINED STATEMENTS OF OPERATIONS

                                     Three Months Ended March 31,
                                         1999           1998

Rental income                         $1,504,169     $1,571,221
Other income                              59,617         77,844

Total income                           1,563,786      1,649,065

Operating expenses                       853,930      1,045,339
Interest, taxes and insurance            550,325        565,532

Depreciation                             237,192        238,891

Total expenses                         1,641,447      1,849,762

Net loss                              $  (77,661)    $ (200,697)

National Housing Partnership
Realty Fund III share of losses       $  (76,116)    $ (196,964)

(3)  TRANSACTIONS WITH THE GENERAL PARTNER

During the three month periods ended March 31, 1999 and 1998, the Partnership
accrued administrative and reporting fees payable to the General Partner in the
amount of $21,562 for services provided to the Partnership. The Partnership has
not made any payments to the General Partner for these fees during the
respective periods. The amount due the General Partner by the Partnership for
administrative and reporting fees was $107,810 at March 31, 1999.

Accrued administrative and reporting fees payable to the General Partner are
paid as cash flow permits or from proceeds generated from the sale or
refinancing of one or more of the underlying properties of the Local Limited
Partnerships.

(4)  SEGMENT INFORMATION

In June 1997, the Financial Accounting Standards Board issued SFAS No. 131,
"Disclosure about Segments of an Enterprise and Related Information", which is
effective for years beginning after December 15, 1997. SFAS 131 established
standards for the way that public business enterprises report information about
operating segments in annual financial statements and requires that those
enterprises report selected information about operating segments in interim
financial reports.  It also establishes standards for related disclosures about
products and services, geographic areas, and major customers.  As defined in
SFAS No. 131, the Partnership has only one reportable segment.  Moreover, 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.

(5)  LEGAL PROCEEDINGS

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

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
operation.  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.

LIQUIDITY AND CAPITAL RESOURCES

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, however, are not expected to impact the Local Limited
Partnerships' ability to meet its cash obligations.

For the past several years, various proposals have been advanced by HUD,
Congress and others proposing the restructuring of HUD's rental assistance
programs under Section 8 of the United States Housing Act of 1937 ("Section 8"),
under which 503 units, 41 percent of the total units owned by the properties in
which the Partnership has invested, receive rental subsidies. On October 27,
1997, the President signed into law the Multifamily Assisted Housing Reform and
Affordability Act of 1997 (the "1997 Housing Act"). Under the 1997 Housing Act,
certain properties assisted under Section 8, with rents above market levels and
financed with HUD-insured mortgage loans, will be restructured by adjusting
subsidized rents to market levels, thereby potentially reducing rent subsidies,
and lowering required debt service costs as needed to ensure financial viability
at the reduced rents and rent subsidies. The 1997 Housing Act retains project-
based subsidies for most properties (properties in rental markets with limited
supply, properties serving the elderly, and certain other properties). The 1997
Housing Act phases out project-based subsidies on selected properties servicing
families not located in rental markets with limited supply, converting such
subsidies to a tenant-based subsidy. Under a tenant-based system, rent vouchers
would be issued to qualified tenants who then could elect to reside at
properties of their choice, provided such tenants have the financial ability to
pay the difference between the selected properties' monthly rent and the value
of the vouchers, which would be established based on HUD's regulated fair market
rent for the relevant geographical areas. The 1997 Housing Act provides that
properties will begin the restructuring process in Federal fiscal year 1999
(beginning October 1, 1998), and that HUD will issue final regulations
implementing 1997 Housing Act on or before October 27, 1998. With respect to
Housing Assistance Payments Contracts ("HAP Contracts") expiring before October
1, 1998, Congress has elected to renew them for one-year terms, generally at
existing rents, so long as the properties remain in compliance with the HAP
Contracts. While the Partnership does not expect the provisions of the 1997
Housing Act to result in a significant number of tenants relocating from
properties owned by the Local Limited Partnerships, there can be no assurance
that the provisions will not significantly affect the operations of the
properties of the Local Limited Partnerships. Furthermore, there can be no
assurance that other changes in Federal housing subsidy policy will not occur.
Any such changes could have an adverse effect on the operations of the
Partnership.

The Partnership's liquidity based on cash and cash equivalents increased to
$598,728 at March 31, 1999, as compared to $594,835 at December 31, 1998.  The
increase was due to $3,893 of cash provided by operating activities.  The
Partnership's existing cash 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.

No working capital advances or repayments occurred between the Partnership and
the Local Limited Partnerships during the three months ended March 31, 1999 and
1998. The combined amount carried as due to the Partnership by the Local Limited
Partnerships was $522,159 as of March 31, 1999. Future advances made will be
charged to operations; likewise, future repayments will be credited to
operations.

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 March 31, 1999,
investments in ten Local Limited Partnerships had been reduced to zero. 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. There were no cash
distributions during the three months ended March 31, 1999 and 1998,
respectively. The receipt of distributions in the future is dependent upon the
operations of the underlying properties of the Local Limited Partnerships to
generate sufficient cash for distribution in accordance with applicable HUD
regulations.

All of the Local Limited Partnerships in which the Partnership has invested
carry deferred acquisition notes due to the original owner of each Property. The
deferred acquisition notes related to Meadowood Townhouses III Limited
Partnership as discussed below reached final maturity in January 1998. All other
notes will reach final maturity during 1999. These notes are secured by both the
Partnership's and the General Partner's interests in the Local Limited
Partnerships. In the event of a default on the notes, the note holders would be
able to assume the General Partner's and the Partnership's interests in the
Local Limited Partnerships.  There can be no assurance that the General Partner
will be successful in extending or restructuring the deferred acquisition notes
as they mature.

Meadowood Townhouses III Limited Partnership's notes payable, plus accrued
interest, were due and payable upon the earlier of the sale, transfer, or
refinancing of the Local limited Partnership or April 30, 1997. A Forbearance
Agreement was executed, which extended the maturity date of these non-recourse
notes payable and accrued interest. Under the terms of this agreement, the
initial period of forbearance expired on April 30, 1997. Such funding was not
approved by April 30, 1997 and a further extension of forbearance until
January 2, 1998 was granted to permit the General Partner to submit an
alternative plan to the noteholders, and to negotiate and close such plan. An
amendment to the Forbearance Agreement requires the Local Limited Partnership to
market the property for sale. If the sale is not closed by November 1999, the
noteholders will have the right to foreclosure on the such Local Limited
Partnership's property. The Forbearance Agreement provides for sharing of net
sale proceeds between the Partners and noteholders. Such proceeds allocated to
the noteholders would be in full satisfaction of the notes payable and the
related interest. Meadowood Townhouse III Limited Partnership's continued
existence as a going concern with its present ownership structure is dependent
on its successful efforts to repay the principal and accrued interest on the
notes payable, or to negotiate further amendments of the terms of the notes and
the related forbearance agreements.

Brunswick Village Limited Partnership's note payable, plus accrued interest,
became due on February 28, 1999, and is currently in default. The remaining
eight Local Limited Partnerships' note payable, plus accrued interest, are due
in December, 1999. As of May 1, 1999, the Local Limited Partnerships' have not
renegotiated the terms of the notes, including the extension of the due date.
Continuation of the Local Limited Partnerships' operations in the present form
is dependent on their ability to extend the maturity dates of these notes or to
repay or refinance the notes.

RESULTS OF OPERATIONS

The Partnership has invested as a limited partner in twelve Local Limited
Partnerships which operate ten rental housing properties. In prior years,
results of operations of NHP Realty Fund III 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 investments in and advances to
Local Limited Partnerships have been reduced to zero, the Partnership's share of
the operations of the Local Limited Partnerships is no longer being recorded.

The Partnership's had a net loss of  $33,786 for the three months ended March
31, 1999 compared to a net loss of $29,653 for the three months ended March 31,
1998. The increase in net loss was primarily due to a decrease in interest
income and an increase in costs and expenses. The Partnership did not recognize
$76,116 of its allocated share of losses from the ten Local Limited Partnerships
for the three months ended March 31, 1999, as the Partnership's net carrying
basis in these Partnerships had been previously reduced to zero. The
Partnership's share of losses from the Local Limited Partnerships, if not
limited to its investment account balance, would have decreased $120,848 between
periods, ended March 31, 1999 compared to the three months ended March 31, 1998.

YEAR 2000 COMPLIANCE

General Description of the Year 2000 Issue and the Nature and Effects of the
Year 2000 on Information Technology (IT) and Non-IT Systems

The Year 2000 issue is the result of computer programs being written using two
digits rather than four digits to define the applicable year.  The Partnership
is dependent upon the General Partner and its affiliates for management and
administrative services ("Managing Agent").  Any of the computer programs or
hardware that have date-sensitive software or embedded chips may recognize a
date using "00" as the year 1900 rather than the year 2000.  This could result
in a system failure or miscalculations causing disruptions of operations,
including, among other things, a temporary inability to process transactions,
send invoices, or engage in similar normal business activities.

Over the past two years, the Managing Agent has determined that it will be
required to modify or replace significant portions of its software and certain
hardware so that those systems will properly utilize dates beyond December 31,
1999.  The Managing Agent presently believes that with modifications or
replacements of existing software and certain hardware, the Year 2000 issue can
be mitigated. However, if such modifications and replacements are not made, or
not completed in time, the Year 2000 issue could have a material impact on the
operations of the Partnership.

The Managing Agent's plan to resolve Year 2000 issues involves four phases:
assessment, remediation, testing, and implementation.  To date, the Managing
Agent has fully completed its assessment of all the information systems that
could be significantly affected by the Year 2000, and has begun the remediation,
testing and implementation phases on both hardware and software systems.
Assessments are continuing in regards to embedded systems.  The status of each
is detailed below.

Status of Progress in Becoming Year 2000 Compliant, Including Timetable for
Completion of Each Remaining Phase

Computer Hardware:

During 1997 and 1998, the Managing Agent identified all of the computer systems
at risk and formulated a plan to repair or replace each of the affected systems.
In August 1998, the mainframe system used by the Managing Agent became fully
functional. In addition to the mainframe, PC-based network servers, routers and
desktop PCs were analyzed for compliance.  The Managing Agent has begun to
replace each of the non-compliant network connections and desktop PCs and, as of
March 31, 1999, had completed approximately 75% of this effort.

The total cost to the Managing Agent to replace the PC-based network servers,
routers and desktop PCs is expected to be approximately $1.5 million of which
$1.3 million has been incurred to date.  The remaining network connections and
desktop PCs are expected to be upgraded to Year 2000 compliant systems by July
31, 1999.

Computer Software:

The Managing Agent utilizes a combination of off-the-shelf, commercially
available software programs as well as custom-written programs that are designed
to fit specific needs.  Both of these types of programs were studied, and
implementation plans written and executed with the intent of repairing or
replacing any non-compliant software programs.

During 1998, the Managing Agent began converting the existing property
management and rent collection systems to its management properties Year 2000
compliant systems. The estimated additional costs to convert such systems at all
properties, is $200,000, and the implementation and the testing process is
expected to be completed by July 31, 1999.

The final software area is the office software and server operating systems.
The Managing Agent has upgraded all non-compliant office software systems on
each PC and has upgraded 80% of the server operating systems.  The remaining
server operating systems are planned to be upgraded to be Year 2000 compliant by
July 31, 1999.

Operating Equipment:

The Managing Agent has operating equipment, primarily at the property sites,
which needed to be evaluated for Year 2000 compliance.  In September 1997, the
Managing Agent began taking a census and inventory of embedded systems
(including those devices that use time to control systems and machines at
specific properties, for example elevators, heating, ventilating, and air
conditioning systems, security and alarm systems, etc.).

The Managing Agent has chosen to focus its attention mainly upon security
systems, elevators, heating, ventilating and air conditioning systems, telephone
systems and switches, and sprinkler systems.  While this area is the most
difficult to fully research adequately, management has not yet found any major
non-compliance issues that put the Managing Agent at risk financially or
operationally.  The Managing Agent intends to have a third-party conduct an
audit of these systems and report their findings by July 31, 1999.

Any of the above operating equipment that has been found to be non-compliant to
date has been replaced or repaired.  To date, these have consisted only of
security systems and phone systems.  As of March 31, 1999 the Managing Agent has
evaluated approximately 86% of the operating equipment for the Year 2000
compliance.

The total cost incurred for all properties managed by the Managing Agent as of
March 31, 1999 to replace or repair the operating equipment was approximately
$400,000. The Managing Agent estimates the cost to replace or repair any
remaining operating equipment is approximately $325,000, which is expected to be
completed by August 30, 1999.

The Managing Agent continues to have "awareness campaigns" throughout the
organization designed to raise awareness and report any possible compliance
issues regarding operating equipment within its enterprise.

Nature and Level of Importance of Third Parties and Their Exposure to the Year
2000

The Managing Agent continues to conduct surveys of its banking and other vendor
relationships to assess risks regarding their Year 2000 readiness.  The Managing
Agent has banking relationships with three major financial institutions, all of
which have indicated their compliance efforts will be complete before May 1999.
The Managing Agent has updated data transmission standards with two of the three
financial institutions.  The Managing Agent's contingency plan in this regard is
to move accounts from any institution that cannot be certified Year 2000
compliant by June 1, 1999.

The Partnership does not rely heavily on any single vendor for goods and
services, and does not have significant suppliers and subcontractors who share
information systems (external agent).  To date the Partnership is not aware of
any external agent with a Year 2000 compliance issue that would materially
impact the Partnership's results of operations, liquidity, or capital resources.
However, the Partnership has no means of ensuring that external agents will be
Year 2000 compliant.

The Managing Agent does not believe that the inability of external agents to
complete their Year 2000 remediation process in a timely manner will have a
material impact on the financial position or results of operations of the
Partnership.  However, the effect of non-compliance by external agents is not
readily determinable.

Costs to Address Year 2000

The total cost of the Year 2000 project to the Managing Agent is estimated at
$3.5 million and is being funded from operating cash flows.  To date, the
Managing Agent has incurred approximately $2.8 million ($0.6 million expensed
and $2.2 million capitalized for new systems and equipment) related to all
phases of the Year 2000 project.  Of the total remaining project costs,
approximately $0.5 million is attributable to the purchase of new software and
operating equipment, which will be capitalized.  The remaining $0.2 million
relates to repair of hardware and software and will be expensed as incurred.
The Partnership's portion of these costs are not material.

Risks Associated with the Year 2000

The Managing Agent believes it has an effective program in place to resolve the
Year 2000 issue in a timely manner.  As noted above, the Managing Agent has not
yet completed all necessary phases of the Year 2000 program.  In the event that
the Managing Agent does not complete any additional phases, certain worst case
scenarios could occur.  The worst case scenarios could include elevators,
security and heating, ventilating and air conditioning systems that read
incorrect dates and operate with incorrect schedules (e.g., elevators will
operate on Monday as if it were Sunday).  Although such a change would be
annoying to residents, it is not business critical.

In addition, disruptions in the economy generally resulting from Year 2000
issues could also adversely affect the Partnership.  The Partnership could be
subject to litigation for, among other things, computer system failures,
equipment shutdowns or failure to properly date business records.  The amount of
potential liability and lost revenue cannot be reasonably estimated at this
time.

Contingency Plans Associated with the Year 2000

The Managing Agent has contingency plans for certain critical applications and
is working on such plans for others.  These contingency plans involve, among
other actions, manual workarounds and selecting new relationships for such
activities as banking relationships and elevator operating systems.


                          PART II - OTHER INFORMATION



ITEM 6.   EXHIBITS AND REPORTS ON FORM 8-K

          (a)  Exhibits

               Exhibit No.

               27      Financial Data Schedule.

          (b)  Form 8-K:  None filed during the quarter ended March 31, 1999.


                                   SIGNATURE
  

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
                              (Registrant)


                              By:  The National Housing Partnership,
                                   its sole General Partner


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


                              By:  /s/Troy D. Butts
                                   Troy D. Butts
                                   As Senior Vice President
                                   and Chief Financial Officer



                              Date: May 17, 1999