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 March 31, 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)

                                 March 31, 2003



ASSETS
   Cash and cash equivalents                                          $ 646
   Accounts receivable                                                  343
                                                                      $ 989
LIABILITIES AND PARTNERS' (DEFICIT) EQUITY
Liabilities
   Administrative and reporting fees payable to
    General Partner                                                    $ 1
   Accrued expenses                                                      12
                                                                         13

Partners' (deficit) equity
   General Partner -- The National Housing
      Partnership (NHP)                                                 (85)
   Original Limited Partner -- 1133 Fifteenth
      Street Three Associates                                           (89)
   Other Limited Partners -- 11,199 investment units                  1,150
                                                                        976
                                                                      $ 989

                       See Accompanying Notes to Financial Statements


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

<TABLE>
<CAPTION>


                                                              Three Months Ended
                                                                   March 31,
                                                              2003          2002
Revenues:
  Equity income from investment in Local Limited
<S>                                                          <C>            <C>
   Partnership                                               $   --         $   1
  Interest income                                                --             1
                                                                 --             2
costs and expenses:

  Administrative and reporting fees to General Partner
    (Note 3)                                                      1             2
  Other operating expenses                                       12            13
                                                                 13            15

Net loss                                                     $ (13)        $ (13)

Allocation of net loss:
  General Partner - NHP                                       $ --          $ --
  Original Limited Partner --
    1133 Fifteenth Street Three Associates                       --            --
  Other Limited Partners                                        (13)          (13)

                                                             $ (13)        $ (13)

Net loss per other limited partnership interest             $ (1.15)      $ (1.15)

                       See Accompanying Notes to Financial Statements
</TABLE>


                  NATIONAL HOUSING PARTNERSHIP REALTY FUND III
                     Statement of Changes in 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, 2002                 $ (85)        $ (89)       $1,163       $ 989

Net loss for the three months
   ended March 31, 2003                 --             --          (13)         (13)

(Deficit) equity at
   March 31, 2003                    $ (85)        $ (89)       $1,150       $ 976

Percentage interest at
   March 31, 2003                        1%            1%           98%        100%
                                        (A)           (B)           (C)


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


                       See Accompanying Notes to Financial Statements
</TABLE>


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


<TABLE>
<CAPTION>


                                                                 Three Months Ended
                                                                     March 31,
                                                                  2003        2002
CASH FLOWS FROM OPERATING ACTIVITIES:
<S>                                                               <C>          <C>
   Interest received                                              $ --         $ 1
   Operating expenses paid                                           --          (1)
   Net cash used in operating activities                             --          --

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

NET DECREASE IN CASH AND CASH EQUIVALENTS                           (1)        (192)

CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD                      647         238

CASH AND CASH EQUIVALENTS, END OF PERIOD                         $ 646        $ 46

RECONCILIATION OF NET LOSS TO NET CASH USED IN OPERATING
   ACTIVITIES:
     Net loss                                                    $ (13)       $ (13)

     Adjustments to reconcile net loss to net cash used in
      operating activities:
      Share of loss from investment in Local Limited
        Partnership                                                  --          (1)
      Increase in administrative and reporting
        fees payable                                                  1           2
      Increase in accrued expenses                                   12          12

          Total adjustments                                          13          13

     Net cash used in operating activities                        $ --        $ --


                       See Accompanying Notes to Financial Statements
</TABLE>


                  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 March 31,
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 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.

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 months ended March 31, 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  FASB  issued  FASB  Interpretation  No.  46  ("FIN46"),
Consolidation of Variable  Interest  Entities,  an Interpretation of ARB No. 51.
FIN46 requires  certain  variable  interest  entities to be  consolidated by the
primary  beneficiary of the entity if the equity  investors in the entity do not
have the  characteristics  of a  controlling  financial  interest or do not have
sufficient  equity at risk for the  entity to  finance  its  activities  without
additional subordinated financial support from other parties. FIN46 is effective
for all new variable  interest  entities  created or acquired  after January 31,
2003. For variable  interest  entities  created or acquired prior to February 1,
2003,  the  provisions  of FIN46 must be applied for the first interim or annual
period  beginning after June 15, 2003. The  Partnership is currently  evaluating
the  effect,  if any,  that the  adoption  of FIN46 will have on its  results of
operations and financial condition.

(2)   INVESTMENTS IN AND ADVANCES TO LOCAL LIMITED PARTNERSHIPS

At March 31, 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
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
$19,000 of its share of losses and $6,000 of its allocated share of profits from
two and one Local Limited  Partnerships  during the three months ended March 31,
2003 and 2002,  respectively.  As of March 31,  2003,  the  Partnership  had not
recognized  approximately $2,524,000 of its allocated share of cumulative losses
from two Local Limited Partnerships 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.

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
March 31,  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  March  31,  2003  is  approximately  $31,000.  Interest  is
calculated at the Chase  Manhattan Bank prime rate plus 2% or 6.25% at March 31,
2003.  Payment of principal  and interest is  contingent  upon the Local Limited
Partnerships having available surplus cash, as defined by HUD regulations,  from
operations,  or  from  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 three months ended March 31, 2003 and 2002,  no advances were made by
the General Partner to the Local Limited  Partnerships.  The balance owed to the
General  Partner  by the  Local  Limited  Partnerships  at  March  31,  2003  is
approximately  $68,000.  Interest  is charged at prime plus 2% or 6.25% at March
31, 2003.

The  accompanying  combined  statements of  operations  have been restated as of
January 1, 2001, to reflect the  operations of Meadowood  Townhouses III Limited
Partnership  as gain from  discontinued  operations  due to its sale in  October
2001.

The following are combined  statements of operations  for the three months ended
March 31, 2003 and 2002,  respectively,  of the Local  Limited  Partnerships  in
which the Partnership has invested.

                        COMBINED STATEMENTS OF OPERATIONS

<TABLE>
<CAPTION>

                                                              Three Months Ended
                                                                  March 31,
                                                           2003               2002
                                                                 (Restated)
                                                                (in thousands)
Revenues:
<S>                                                        <C>               <C>
Rental income                                              $ 138             $ 126
Other income                                                    5                 5
   Total revenues                                             143               131

Expenses:
Operating expenses                                            121                84
Interest, taxes, and insurance                                 22                23
Depreciation                                                   20                18
   Total expenses                                             163               125

(Loss) income before discontinued operations               $ (20)             $ 6
Income from discontinued operation                              1                 1

National Housing Partnership Realty Fund III
   share of (loss) income                                  $ (19)             $ 7
</TABLE>

(3)   TRANSACTIONS WITH THE GENERAL PARTNER

During the three months ended March 31, 2003 and 2002, the  Partnership  accrued
administrative  and  reporting  fees to the  General  Partner  in the  amount of
approximately  $1,000 and $2,000,  respectively,  for  services  provided to the
Partnership.  The  Partnership did not make a payment to the General Partner for
these fees during the three months ended March 31, 2003 and 2002,  respectively.
The amount due to the General Partner by the Partnership for  administrative and
reporting fees was approximately $1,000 at March 31, 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 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 this uncertainty.

(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.

(6) ABANDONMENT OF LIMITED PARTNERSHIP UNITS

During the three months ended March 31, 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
abandonments.  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 three months ended March 31, 2002.


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.  The discussions of the  Registrant's
business  and  results  of  operations,   including  forward-looking  statements
pertaining to such matters,  do not take into account the effects of any changes
to the  Registrant's  business  and results of  operations.  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; 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  $646,000 at March 31, 2003 as compared to approximately  $647,000
at  December  31,  2002.  The  decrease  was due to a  payment  of  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 the remaining  Local Limited  Partnership has been reduced to
zero at March 31,  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 March  31,  2003 is  approximately  $31,000.
Interest is calculated at the Chase  Manhattan  Bank prime rate plus 2% or 6.25%
at March 31, 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 three months ended March 31, 2003 and 2002,  no advances were made by
the General  Partner to the Local Limited  Partnership.  The balance owed to the
General  Partner  by  the  Local  Limited  Partnership  at  March  31,  2003  is
approximately  $68,000.  Interest  is charged at prime plus 2% or 6.25% at March
31, 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  March  31,  2003,
investment in the remaining Local Limited  Partnership 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 Partnership.

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.  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.

The  Partnership  had a net loss of  approximately  $13,000 for the three months
ended March 31, 2003 and 2002.  Revenues decreased during the three months ended
March 31, 2003 as  compared to the similar  period for 2002 due to a decrease in
interest  income on cash  balances  maintained  in  interest  bearing  accounts.
Expenses  decreased slightly during the three months ended March 31, 2003 due to
a decrease in  administrative  and reporting  fees to the General  Partner.  The
Partnership did not recognize  approximately  $19,000 of its share of losses and
$6,000  of its  allocated  share  of  profit  from  two  and one  Local  Limited
Partnerships  for the three months ended March 31, 2003 and 2002,  respectively.
At March 31, 2003, the Partnership had not recognized  approximately  $2,524,000
of its allocated share of cumulative losses from two Local Limited  Partnerships
in which its investment is zero.

Recent Accounting Pronouncements

In  January  2003,  the  FASB  issued  FASB  Interpretation  No.  46  ("FIN46"),
Consolidation of Variable  Interest  Entities,  an Interpretation of ARB No. 51.
FIN46 requires  certain  variable  interest  entities to be  consolidated by the
primary  beneficiary of the entity if the equity  investors in the entity do not
have the  characteristics  of a  controlling  financial  interest or do not have
sufficient  equity at risk for the  entity to  finance  its  activities  without
additional subordinated financial support from other parties. FIN46 is effective
for all new variable  interest  entities  created or acquired  after January 31,
2003. For variable  interest  entities  created or acquired prior to February 1,
2003,  the  provisions  of FIN46 must be applied for the first interim or annual
period  beginning after June 15, 2003. The  Partnership is currently  evaluating
the  effect,  if any,  that the  adoption  of FIN46 will have on its  results of
operations and financial condition.

ITEM 3.     CONTROLS AND PROCEDURES

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,  within 90 days of the
filing  date  of this  quarterly  report,  evaluated  the  effectiveness  of the
Partnership's  disclosure  controls and  procedures  (as defined in Exchange Act
Rules 13a-14(c) and 15d-14(c)) and have determined that such disclosure controls
and  procedures  are  adequate.  There have been no  significant  changes in the
Partnership's  internal  controls or in other  factors that could  significantly
affect the  Partnership's  internal  controls since the date of evaluation.  The
Partnership does not believe any significant deficiencies or material weaknesses
exist in the Partnership's internal controls. Accordingly, no corrective actions
have been taken.


                           PART II - OTHER INFORMATION


ITEM 6.     EXHIBITS AND REPORTS ON FORM 8-K

            a) Exhibits:

                  99    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 March 31, 2003.

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


                               Date: May 13, 2003

                                  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  quarterly  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 quarterly
report;


3.  Based  on my  knowledge,  the  financial  statements,  and  other  financial
information  included in this quarterly  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 quarterly report;


4.  The  registrant's  other  certifying  officers  and  I are  responsible  for
establishing and maintaining  disclosure  controls and procedures (as defined in
Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:


      a)  Designed  such  disclosure  controls  and  procedures  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 quarterly report is
      being prepared;


      b) Evaluated the effectiveness of the registrant's disclosure controls and
      procedures  as of a date  within 90 days prior to the filing  date of this
      quarterly report (the "Evaluation Date"); and


      c)  Presented  in  this  quarterly   report  our  conclusions   about  the
      effectiveness  of the  disclosure  controls  and  procedures  based on our
      evaluation as of the Evaluation Date;


5. The registrant's other certifying officers and I have disclosed, based on our
most recent evaluation,  to the registrant's auditors and the audit committee of
registrant's   board  of  directors  (or  persons   performing   the  equivalent
functions):


      a) All  significant  deficiencies  in the design or  operation of internal
      controls which could adversely affect the registrant's  ability to record,
      process,  summarize and report  financial data and have identified for the
      registrant's auditors any material weaknesses in internal controls; and


      b) Any fraud,  whether or not material,  that involves management or other
      employees  who  have  a  significant  role  in the  registrant's  internal
      controls; and


6. The  registrant's  other  certifying  officers  and I have  indicated in this
quarterly  report  whether or not there  were  significant  changes in  internal
controls or in other factors that could  significantly  affect internal controls
subsequent to the date of our most recent  evaluation,  including any corrective
actions with regard to significant deficiencies and material weaknesses.


Date: May 13, 2003

                                   /s/Patrick J. Foye
                                    Patrick J. Foye
                                    President of National Corporation for
                                    Housing Partnerships,  equivalent of the
                                    chief executive officer of the Partnership

                                  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  quarterly  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 quarterly
report;


3.  Based  on my  knowledge,  the  financial  statements,  and  other  financial
information  included in this quarterly  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 quarterly report;


4.  The  registrant's  other  certifying  officers  and  I are  responsible  for
establishing and maintaining  disclosure  controls and procedures (as defined in
Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:


      a)  Designed  such  disclosure  controls  and  procedures  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 quarterly report is
      being prepared;


      b) Evaluated the effectiveness of the registrant's disclosure controls and
      procedures  as of a date  within 90 days prior to the filing  date of this
      quarterly report (the "Evaluation Date"); and


      c)  Presented  in  this  quarterly   report  our  conclusions   about  the
      effectiveness  of the  disclosure  controls  and  procedures  based on our
      evaluation as of the Evaluation Date;


5. The registrant's other certifying officers and I have disclosed, based on our
most recent evaluation,  to the registrant's auditors and the audit committee of
registrant's   board  of  directors  (or  persons   performing   the  equivalent
functions):


      a) All  significant  deficiencies  in the design or  operation of internal
      controls which could adversely affect the registrant's  ability to record,
      process,  summarize and report  financial data and have identified for the
      registrant's auditors any material weaknesses in internal controls; and


      b) Any fraud,  whether or not material,  that involves management or other
      employees  who  have  a  significant  role  in the  registrant's  internal
      controls; and


6. The  registrant's  other  certifying  officers  and I have  indicated in this
quarterly  report  whether or not there  were  significant  changes in  internal
controls or in other factors that could  significantly  affect internal controls
subsequent to the date of our most recent  evaluation,  including any corrective
actions with regard to significant deficiencies and material weaknesses.


Date: May 13, 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

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 March 31,
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: May 13, 2003


                                     /s/Paul J. McAuliffe
                               Name: Paul J. McAuliffe
                               Date: May 13, 2003


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.