In this paper we consider an interactive communication system with two users, who sequentially observe two correlated sources, and send the quantized observation symbol to each other. The sources are functions of a random variable, which the users wish to estimate. The transmission is costly and the fidelity of reconstruction is measured by a distortion function. We model this problem using dynamic team theory. The two users are viewed as two decision makers that have access to different information but need to coordinate their actions to minimize a common objective. Through a series of simplifications, we identify time-homogeneous information states (sufficient statistics) for the encoding and decoding strategies and a dynamic programming decomposition to compute the optimal strategies.