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A real-time communication system with noisy feedback is considered. The system consists of a Markov source, forward and backward discrete memoryless channels, and a receiver with limited memory. The receiver can send messages to the encoder over the backward noisy channel. The encoding at the encoder and the decoding, the feedback, and the memory update at the receiver must be done in real-time. A distortion metric that does not tolerate delays is given. The objective is to design an optimal real-time communication strategy, i.e., design optimal real-time encoding, decoding, feedback, and memory update strategies to minimize a total expected distortion over a finite horizon. This problem is formulated as a decentralized stochastic optimization problem and a methodology for its sequential decomposition is presented. This results in a set of nested optimality equations that can be used to sequentially determine optimal communication strategies. The methodology exponentially simplifies the search for determining an optimal real-time communication strategy.