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, 2002


[ ]   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                               (I.R.S. Employer
 incorporation or organization)                              Identification No.)

                        55 BEATTIE PLACE, PO BOX 1089
                             GREENVILLE, SC 29602
                   (Address of principal executive offices)

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


Check  whether the issuer (1) filed all reports  required to be filed by Section
13 or 15(d) of the  Securities  Exchange  Act of 1934  during the  preceding  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___

<PAGE>

                         PART I - FINANCIAL INFORMATION


ITEM 1.     FINANCIAL STATEMENTS

a)

                 NATIONAL  HOUSING  PARTNERSHIP  REALTY  FUND  III
                        (A Maryland Limited Partnership)
                        Statement of Financial Position
                                   (Unaudited)
                        (in thousands, except unit data)

                                 March 31, 2002



ASSETS
   Cash and cash equivalents                                          $ 46
   Accounts receivable                                                  341
   Investment in Local Limited Partnership                              653
                                                                     $1,040
LIABILITIES AND PARTNERS' (DEFICIT) EQUITY
Liabilities
   Administrative and reporting fee payable to
      General Partner (Note 3)                                        $ 18
   Accrued expenses                                                      12
                                                                         30

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                  1,184
                                                                      1,010
                                                                     $1,040

                See Accompanying Notes to Financial Statements


<PAGE>


b)

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



                                                             Three Months Ended
                                                                  March 31,
                                                            2002          2001
REVENUES:
  Equity income from investment in Local Limited
    Partnership                                           $    1         $   --
  Interest income                                              1              9
                                                               2              9
COSTS AND EXPENSES:
  Administrative and reporting fees to General
   Partner                                                     2              4
  Other operating expenses                                    13             22
                                                              15             26

NET LOSS                                                  $  (13)        $  (17)

NET LOSS ASSIGNABLE TO LIMITED PARTNERS                   $  (13)        $  (17)

NET LOSS PER LIMITED PARTNERSHIP INTEREST                 $(1.15)        $(1.48)

                See Accompanying Notes to Financial Statements


<PAGE>


c)

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

<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 three months
   ended March 31, 2002                 --             --           (13)        (13)

(Deficit) equity at
   March 31, 2002                    $ (85)        $ (89)       $ 1,184      $1,010

Percentage interest at
   March 31, 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>

<PAGE>


d)

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

                                                                   Three Months Ended
                                                                       March 31,
                                                                    2002        2001
CASH FLOWS FROM OPERATING ACTIVITIES:
<S>                                                                 <C>          <C>
   Interest received                                                $ 1          $ 9
   Operating expenses paid, including working capital
      advances of $8 in 2001                                           (1)        (58)
   Net cash used in operating activities                               --         (49)

CASH FLOWS USED IN FINANCING ACTIVITIES:
   Withholding taxes paid for limited partners                      (192)          --

NET DECREASE IN CASH AND CASH EQUIVALENTS                           (192)         (49)

CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD                        238         468

CASH AND CASH EQUIVALENTS, END OF PERIOD                            $ 46        $ 419

RECONCILIATION OF NET LOSS TO NET CASH USED IN
   OPERATING ACTIVITIES:
     Net loss                                                      $ (13)       $ (17)

     Adjustments to reconcile net loss to net cash used in
      operating activities:
      Equity income from investment in Local Limited
        Partnership                                                    (1)         --
      Increase in administrative and reporting fees
        payable                                                         2           4
      Increase (decrease) in accrued expenses                          12         (36)

          Total adjustments                                            13         (32)

     Net cash used in operating activities                          $ --        $ (49)

                See Accompanying Notes to Financial Statements

</TABLE>

<PAGE>

e)
                 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 March 31,
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.

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 March 31, 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
$6,000 and  $11,000  of its  allocated  share of profits  from one and two Local
Limited  Partnerships  during the three  months  ended  March 31, 2002 and 2001,
respectively.  As  of  March  31,  2002,  the  Partnership  had  not  recognized
approximately  $2,427,000 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  income for the three months ended March 31, 2002.  As of March
31, 2002 the  Partnership  has an  investment in Local  Limited  Partnership  of
approximately  $653,000 which represents the residual cash flow from the sale of
the property owned by Meadowood Townhouses III Limited Partnership.

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,  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 March 31, 2002 is approximately $31,000.

During the three months ended March 31, 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 three months ended March 31, 2001.  There were no such advances made for the
three months ended March 31, 2002.

No advances were made by the General Partner during the three months ended March
31, 2001 and 2002. The balance owed to the General  Partner by the Local Limited
Partnerships at March 31, 2002 is approximately $11,000.  Interest is charged at
prime plus 2% or 6.75% at March 31, 2002.

The following are combined  statements of operations  for the three months ended
March 31, 2002 and 2001,  respectively,  of the Local  Limited  Partnerships  in
which the Partnership has invested.

                        COMBINED STATEMENTS OF OPERATIONS

                                                          Three Months Ended
                                                              March 31,
                                                         2002            2001
                                                            (in thousands)
         Rental income                                   $ 126          $ 461
         Other income                                        8              19
            Total income                                   134             480

         Operating expenses                                 76             268
         Interest, taxes, and insurance                     33             130
         Depreciation                                       18              71
            Total expense                                  127             469

         Net income                                       $ 7            $ 11

         National Housing Partnership
            Realty Fund III share of income               $ 7            $ 11

(3)   TRANSACTIONS WITH THE GENERAL PARTNER

During the three months ended March 31, 2002 and 2001, the  Partnership  accrued
administrative  and  reporting  fees to the  General  Partner  in the  amount of
approximately  $2,000 and $4,000,  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 $18,000 at March 31, 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.

<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  $46,000 at March 31, 2002, as compared to approximately  $238,000
at December 31, 2001. The decrease was due to the payment of  withholding  taxes
on behalf of 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.

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
March 31,  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 March 31, 2002 is approximately $31,000.

During the three months ended March 31, 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 three months ended March 31, 2001.  There were no such advances made for the
three months ended March 31, 2002.

No advances were made by the General Partner during the three months ended March
31, 2001 and 2002. The balance owed to the General  Partner by the Local Limited
Partnerships at March 31, 2002 is approximately $11,000.  Interest is charged at
prime plus 2% or 6.75% at March 31, 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  March  31,  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  three  months  ended  March  31,  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  income for the three months  ended March 31, 2002.  As of March 31, 2002
the Partnership has an investment in Local Limited  Partnership of approximately
$653,000  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  $13,000 for the three months
ended March 31, 2002,  compared to a net loss of  approximately  $17,000 for the
three  months  ended  March  31,  2001.  The  decrease  in net loss was due to a
decrease in  operating  expenses  offset by a decrease in interest  income.  The
Partnership did not recognize  approximately $6,000 and $11,000 of its allocated
share of profit from one and two Local Limited  Partnership for the three months
ended March 31, 2002 and 2001, respectively.  At March 31, 2002, the Partnership
had not recognized approximately $2,427,000 of its allocated share of cumulative
losses from one Local Limited Partnership in which its investment is zero.

<PAGE>

                           PART II - OTHER INFORMATION



ITEM 6.     EXHIBITS AND REPORTS ON FORM 8-K

            a)    Exhibits:

                  None.

            b)    Reports on Form 8-K:

                  None filed during the quarter ended March 31, 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/Martha L. Long
                                          Martha L. Long
                                          Senior Vice President and
                                          Controller


                                    Date: May 14, 2002