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

                                   Form 10-QSB

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

                    For the quarterly period ended June 30, 2002


[] TRANSITION REPORT UNDER 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                               (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
                        (A Maryland Limited Partnership)
                         Statement of Financial Position
                                   (Unaudited)
                          (in thousands, except unit data)

                                  June 30, 2002
<TABLE>
<CAPTION>



ASSETS
<S>                                                                   <C>
   Cash and cash equivalents                                          $ 41
   Accounts receivable                                                  341
   Investment in Local Limited Partnership                              651
                                                            --          ---
                                                                     $1,033
LIABILITIES AND PARTNERS' (DEFICIT) EQUITY
Liabilities
   Administrative and reporting fee payable to
      General Partner (Note 3)                                        $ 19
   Accrued expenses                                                      22
                                                            ---          --
                                                                         41

Partners' (deficit) equity
   General Partner -- The National Housing
      Partnership (NHP)                                                 (85)
   Original Limited Partner -- 1133 Fifteenth
      Street Three Associates                                           (89)
   Other Limited Partners -- 11,300 investment units                  1,166
                                                                      -----
                                                                        992
                                                                     $1,033

                   See Accompanying Notes to Financial Statements
</TABLE>

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


<TABLE>
<CAPTION>

                                       Three Months Ended          Six Months Ended
                                            June 30,                   June 30,
                                       2002          2001          2002         2001
                                       ----          ----          ----         ----
Revenues:
<S>                                   <C>             <C>         <C>         <C>
  Interest income                     $    --         $ 4         $     1     $    13
                                       ------          --          ------      ------
                                         --             4             1          13
                                  ----   --     -----   -        -------     ------
costs and expenses:
  Equity loss from investment
    in Local Limited Partnership            2            --             1          --
  Administrative and reporting
    fees to General Partner                 1             3             3           7
  Other operating expenses                 15            19            28          41
                                    ----   --     ----   --        ------      ------
                                           18            22            32          48
                                    ----   --     ----   --        ------      ------

Net loss                               $ (18)        $ (18)       $   (31)    $   (35)
                                        ====          ====         ======      ======

Allocation of net loss:
  General Partner - NHP                $ --          $ --         $    --     $    --
  Original Limited Partner --
  1133 Fifteenth Street Three
  Associates                               --            --            --          --
  Other Limited Partners                  (18)          (18)          (31)        (35)
                                     ---  ---      ---  ---        ------      ------

                                       $ (18)        $ (18)       $   (31)    $   (35)
                                        ====          ====         ======      ======
Net loss per other limited
  partnership interest                $ (1.59)      $ (1.57)      $ (2.74)    $ (3.05)
                                       ======        ======        ======      ======

                   See Accompanying Notes to Financial Statements
</TABLE>

                    NATIONAL HOUSING PARTNERSHIP REALTY FUND III
                        (A Maryland Limited Partnership)
                     Statement of Partners' (Deficit) Equity
                                   (Unaudited)
                                   (in thousands)


<TABLE>
<CAPTION>

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

(Deficit) equity at
<S>         <C> <C>                  <C>           <C>          <C>          <C>
   December 31, 2001                 $ (85)        $ (89)       $1,197       $1,023

Net loss for the six months
   ended June 30, 2002                  --             --          (31)         (31)
                                  ---   --      ---    --       -- ---      --  ---

(Deficit) equity at
   June 30, 2002                     $ (85)        $ (89)       $1,166       $ 992
                                      ====          ====         =====        ====

Percentage interest at
   June 30, 2002                         1%            1%           98%        100%
                                  ====   ==     ====   ==      ===  ===    ==  ====
                                        (A)           (B)           (C)


(A)   General Partner
(B)   Original Limited Partner
(C)   Consists of 11,300 investment units

                   See Accompanying Notes to Financial Statements
</TABLE>

                    NATIONAL HOUSING PARTNERSHIP REALTY FUND III
                        (A Maryland Limited Partnership)
                            Statements of Cash Flows
                                   (Unaudited)
                                   (in thousands)


<TABLE>
<CAPTION>

                                                                  Six Months Ended
                                                                        June 30,
                                                                  2002        2001
CASH FLOWS FROM OPERATING ACTIVITIES:
<S>                                                               <C>         <C>
   Interest received                                              $ 1         $ 13
   Operating expenses paid                                           (6)        (70)
                                                                ---  --      -- ---
   Net cash used in operating activities                             (5)        (57)
                                                                ---  --      -- ---

CASH FLOWS FROM FINANCING ACTIVITIES:
   Withholding taxes paid for limited partners                     (192)       (138)
   Principal payments on loans or notes payable                      --          (2)
                                                               ---   --      --- --
   Net cash used in financing activities                           (192)       (140)
                                                                -  ----      - ----

NET DECREASE IN CASH AND CASH EQUIVALENTS                          (197)       (197)

CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD                      238         468
                                                               --   ---     --  ---

CASH AND CASH EQUIVALENTS, END OF PERIOD                          $ 41        $ 271
                                                                   ===         ====

RECONCILIATION OF NET LOSS TO NET CASH USED IN OPERATING
   ACTIVITIES:
     Net loss                                                    $ (31)       $ (35)
                                                                  ----         ----

     Adjustments to reconcile net loss to net cash used in
      operating activities:
      Equity loss from investment in Local Limited
        Partnership                                                   1          --
      Increase in administrative and reporting fees
        payable                                                       3           7
      Increase (decrease) in accrued expenses                        22         (29)
                                                               ---   --      -- ---

          Total adjustments                                          26         (22)
                                                               ---   --      -- ---

     Net cash used in operating activities                        $ (5)       $ (57)
                                                                   ===         ====

                   See Accompanying Notes to Financial Statements
</TABLE>

                    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, 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  interest 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 June 30,
2002, 11,300 limited partnership interests were outstanding.

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"). 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 NCHP at the time the
Partnership was formed and whose general partner is NHP.


<PAGE>



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.

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, 2001.

(2)   INVESTMENTS IN AND ADVANCES TO LOCAL LIMITED PARTNERSHIPS

At June 30, 2002, 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 terminated.

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 Partnerships 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
$44,000 of its share of losses and  $19,000  of its  allocated  share of profits
from one and two Local Limited Partnerships during the six months ended June 30,
2002 and  2001,  respectively.  As of June 30,  2002,  the  Partnership  had not
recognized  approximately $2,476,000 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.  As such the Local  Limited  Partnership  recognized  approximately
$1,000 in equity  loss for the six months  ended June 30,  2002.  As of June 30,
2002  the  Partnership  has  an  investment  in  Local  Limited  Partnership  of
approximately  $651,000 which represents the residual cash flow from the sale of
the property owned by Meadowood Townhouses III Limited Partnership.

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 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  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  Partnership,
interest continues to be accrued under the original terms of the note agreement.
The note is in  default  and the  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 the remaining Local Limited  Partnership has been reduced to zero at
June 30,  2002.  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 June 30, 2002 is approximately $31,000.

During the six months  ended June 30, 2001 the  Partnership  advanced one of the
Local Limited  Partnerships  approximately  $8,000 to cover  partnership  entity
expenses.  As noted above this amount has been included in operating expense for
the six months ended June 30, 2001. There were no such advances made for the six
months ended June 30, 2002.

During  the six  months  ended  June  30,  2002  the  General  Partner  advanced
approximately  $57,000  to  one  of  the  Local  Limited  Partnerships  to  fund
partnership entity expenses. No advances were made by the General Partner during
the six months ended June 30, 2001.  The balance owed to the General  Partner by
the  Local  Limited  Partnerships  at June 30,  2002 is  approximately  $68,000.
Interest is charged at prime plus 2% or 6.75% at June 30, 2002.

The  following are combined  statements  of operations  for the six months ended
June 30, 2002 and 2001, respectively, of the Local Limited Partnerships in which
the Partnership has invested.

                        COMBINED STATEMENTS OF OPERATIONS

<TABLE>
<CAPTION>

                                      Three Months Ended          Six Months Ended
                                           June 30,                   June 30,
                                      2002          2001         2002         2001
                                      ----          ----         ----         ----
                                        (in thousands)             (in thousands)

<S>                                  <C>           <C>           <C>         <C>
Rental income                        $ 122         $ 474         $ 248       $ 935
Other income                              7            22            15          41
                                   -----  -     ----   --      ----  --    ----  --
   Total income                         129           496           263         976
                                   ---  ---     ---   ---      ---  ---    ---  ---

Operating expenses                      128           267           204         535
Interest, taxes, and insurance           35           151            68         281
Depreciation                             19            70            37         141
                                   ----  --     ----   --      ----  --    ---  ---
   Total expense                        182           488           309         957
                                   ---  ---     ---   ---      ---  ---    ---  ---

Net (loss) income                    $ (53)         $ 8          $ (46)       $ 19
                                      ====           ==           ====         ===

National Housing Partnership
  Realty Fund III share of
   (loss) income                     $ (52)         $ 8          $ (45)       $ 19
                                      ====           ==           ====         ===
</TABLE>

(3)   TRANSACTIONS WITH THE GENERAL PARTNER

During the six months  ended June 30,  2002 and 2001,  the  Partnership  accrued
administrative  and  reporting  fees to the  General  Partner  in the  amount of
approximately  $3,000 and $7,000,  respectively,  for  services  provided to the
Partnership.  The  Partnership  did not make any payments to the General Partner
for these  fees  during  either of the  respective  periods.  The amount due the
General  Partner by the Partnership  for  administrative  and reporting fees was
approximately $19,000 at June 30, 2002.

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 one or more of the underlying  properties of the
Local Limited Partnerships.

(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 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 these uncertainties.


<PAGE>



(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.


<PAGE>




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

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

LIQUIDITY AND CAPITAL RESOURCES

All of the Local  Limited  Partnerships  in which the  Partnership  has invested
carry notes payable due the original  owner of each  Property.  All of the notes
reached  final  maturity  during  1999.  These  notes  were  secured by both the
Partnership's  and  the  General  Partner's   interests  in  the  Local  Limited
Partnerships.  Meadowood  Townhouses III and Edmond Estates Limited Partnerships
both had notes which were executed by the respective  Limited  Partnerships with
the  seller  as  part  of  the  acquisition  of  the  property  by  the  Limited
Partnership.  The notes were nonrecourse and were subordinated to the respective
mortgage  notes on each property for as long as HUD insures the mortgage  notes.
Any payments due from project  income were payable from surplus cash, as defined
by the HUD Regulatory Agreement. Neither the Limited Partnership nor any partner
thereof,  present or future,  assumed any personal  liability for the payment of
the notes.  The notes were due in November 1999 for Meadowood  Townhouse III and
in December 1999 for Edmond Estates Limited  Partnerships.  Meadowood Townhouses
III Limited  Partnership had a note which was executed by the respective Limited
Partnership  with the seller as part of the  acquisition  of the property by the
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 has accepted a discount on the note as the proceeds were not  sufficient to
fully  satisfy  the  unpaid  amount  at the time of the sale.  Regarding  Edmond
Estates Limited Partnership, interest continues to be accrued under the original
terms of the note agreements. The note is in default and the 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.

The  Partnership's  liquidity  based on cash and cash  equivalents  decreased to
approximately $41,000 at June 30, 2002, as compared to approximately $238,000 at
December 31, 2001. The decrease was due to the payment of operating expenses and
withholding taxes on behalf of the limited partners of the Partnership partially
offset by interest  income  received as a result of cash balances  maintained in
interest   bearing   accounts.   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.

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  investments  in and
advances to the remaining Local Limited  Partnership has been reduced to zero at
June 30,  2002.  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 Partnerships. These
advances  are  carried  as a payable  to the  Partnership  by the Local  Limited
Partnership and at June 30, 2002 is approximately $31,000.

During the six months  ended June 30, 2001 the  Partnership  advanced one of the
Local Limited  Partnerships  approximately  $8,000 to cover  Partnership  entity
expenses.  As noted above this amount has been included in operating expense for
the six months ended June 30, 2001. There were no such advances made for the six
months ended June 30, 2002.

During  the six  months  ended  June  30,  2002  the  General  Partner  advanced
approximately  $57,000  to  one  of  the  Local  Limited  Partnerships  to  fund
partnership entity expenses. No advances were made by the General Partner during
the six months ended June 30, 2001.  The balance owed to the General  Partner by
the  Local  Limited  Partnerships  at June 30,  2002 is  approximately  $68,000.
Interest is charged at prime plus 2% or 6.75% at June 30, 2002.

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 June 30, 2002, investment
in the remaining  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 those
investments  not  reduced  to  zero,  distributions  received  are  recorded  as
distributions from Local Limited  Partnership.  There were no cash distributions
during the six months ended June 30, 2002 and 2001. The receipt of distributions
in future  quarters and years is dependent upon the operations of the underlying
properties of the Local Limited  Partnerships  to generate  sufficient  cash for
distribution in accordance with applicable HUD regulations.

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  Partnerships has been reduced to zero, the Partnership's
share of the  operations  of the Local Limited  Partnerships  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.  As such the Partnership recognized approximately $1,000 in
equity  loss for the six months  ended June 30,  2002.  As of June 30,  2002 the
Partnership  has an  investment in Local Limited  Partnership  of  approximately
$651,000  which  represents the residual cash flow from the sale of the property
owned by Meadowood Townhouses III Limited Partnership.

The  Partnership  had a net loss of  approximately  $18,000  and $31,000 for the
three  and  six  months  ended  June  30,  2002,  compared  to  a  net  loss  of
approximately  $18,000 and  $35,000 for the three and six months  ended June 30,
2001.  The decrease in net loss for the six months ended June 30, 2002,  was due
to a decrease in  operating  expenses  offset by a decrease in interest  income.
Operating  expenses  decreased due to a decrease in advances to one of the Local
Limited Partners and  administrative  and reporting fees to the General Partner.
Interest  income  decreased  as a result of lower cash  balances  maintained  in
interest  bearing  accounts.  The net loss for the three  months  ended June 30,
2002,   remained  relatively   constant.   The  Partnership  did  not  recognize
approximately  $44,000 of its share of losses and $19,000 of its allocated share
of profit from one and two Local Limited  Partnerships  for the six months ended
June 30, 2002 and 2001, respectively.  At June 30, 2002, the Partnership had not
recognized  approximately $2,476,000 of its allocated share of cumulative losses
from one Local Limited Partnership in which its investment is zero.


<PAGE>



ITEM 6.     EXHIBITS AND REPORTS ON FORM 8-K

            a)    Exhibits:

                  99    Certification of Chief  Executive   Officer   and  Chief
                        Financial Officer

            b)    Reports on Form 8-K:

                  None filed during the quarter ended June 30, 2002.


<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
                                  (Registrant)


                                    By:   The National Housing Partnership,
                                          Its sole General Partner


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


                                    By:   /s/Patrick J. Foye
                                          Patrick J. Foye
                                          President


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


                                    Date: August 14, 2002


<PAGE>


Exhibit 99


                          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 June 30,
2002 as filed with the  Securities  and Exchange  Commission  on the date hereof
(the  "Report"),  Patrick  J. Foye,  as the  equivalent  of the Chief  Executive
Officer of the  Partnership,  and Paul J.  McAuliffe,  as the  equivalent of the
Chief Financial Officer of the Partnership,  each hereby certifies,  pursuant to
18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley
Act of 2002, that, to the best of his knowledge:

      (1)   The Report fully complies with the  requirements of Section 13(a) or
            15(d) of the Securities Exchange Act of 1934; and

      (2)   The  information  contained in the Report  fairly  presents,  in all
            material respects, the financial condition and results of operations
            of the Partnership.


                                           /s/Patrick J. Foye
                                    Name:  Patrick J. Foye
                                    Date:  August 14, 2002


                                           /s/Paul J. McAuliffe
                                    Name:  Paul J. McAuliffe
                                    Date:  August 14, 2002


This  certification  accompanies  the  Report  pursuant  to  Section  906 of the
Sarbanes-Oxley  Act of 2002 and shall not,  except to the extent required by the
Sarbanes-Oxley  Act of 2002, be deemed filed by the  Partnership for purposes of
Section 18 of the Securities Exchange Act of 1934, as amended.