From a traditional perspective, the virgin birth has always been one of the essentials of the Christian faith. Jesus was not born in sin and he had no sin nature (Hebrews 7:26). For those that hold to the doctrine of original sin, given the sin nature is passed down from generation to generation through the father (Romans 5:12, 17, 19), the virgin birth thwarted the transmission of the sin nature and allowed for the incarnation. So the virgin birth is important to both the deity and humanity of Jesus.
The First Messianic Promise
It is after the fall of man has taken place that God makes the first messianic promise:
“God said ‘And I will put enmity between you and the woman, and between your offspring and hers; he will crush your head, and you will strike his heel.” (Gen. 3:15)
The messianic interpretation of Gen 3:15 is recorded in the Palestinian Targum, (first century C.E.)
“And I will put enmity between thee and the woman, and between the seed of your offspring and the seed of her offspring; and it shall be that when the offspring of the woman keep the commandments of the Law, they will aim right [at you] and they will smite you on the head; but when they abandon the commandments of the Law, you will aim right [at them], and you will wound them in the heel. However, for them there will be remedy but for you there will be none, and in the future they will make peace with the heel of the king, Messiah.” 
I should also note that Dr. Alfred Edersheim in his classic work, The Life and Times of Jesus the Messiah (appendix 9) mentions that additional rabbinic opinions support the understanding that Genesis 3:15 refers to the Messiah. The point is that we see what is called the “the Proto-evangelium” or the beginning of salvation history. God was planning on doing something for the entire world.
Let’s look at Isaiah 7: 10-16:
“Then the Lord spoke again to Ahaz, saying, Ask a sign for yourself from the Lord your God; make it deep as Sheol or high as heaven.”But Ahaz said, “I will not ask, nor will I test the Lord!” Then he said, “Listen now, O house of David! Is it too slight a thing for you to try the patience of men, that you will try the patience of my God as well?Therefore the Lord Himself will give you a sign: Behold, a virgin will be with child and bear a son, and she will call His name Immanuel.He will eat curds and honey at the time He knows enough to refuse evil and choose good. For before the boy will know enough to refuse evil and choose good, the land whose two kings you dread will be forsaken.”- NASB
Possible Options in Interpreting the Virgin Birth Prophecy
In this case, the virgin birth has one fulfillment which is in the birth of Jesus. In some cases, the interpreter says Isaiah was prophesying of the future birth of Christ and the prophecy has little to do with the immediate context or situation at hand.
So when we look at the single fulfillment view, I do agree that there is a future referent. However, I do think this has some challenges and I also think the next three options present some more favorable approaches to the issue of the virgin birth.
In this view, this principle states that the prophecy may have more than one fulfillment. In other words, the immediate context shows that the sign is for King Ahaz while the Matthew 1:22-23 is a sign about the birth of Jesus. To read more about this approach, see Craig Blomberg’s article called Interpreting Old Testament Prophetic Literature in Matthew: Double Fulfillment.
In this interpretation, there is one block of Scripture that deals with one person, time, or event that may be followed by another block of Scripture that deals with a different person, time, and place without making any clear distinction between two blocks or indicating that there is a gap of time between the two blocks. While “Double Fulfillment” states that one prophecy can have two fulfillments, “Double Reference” says that one piece of Scripture actually contains two prophecies, each having its own fulfillment. 
So in the immediate context, while King Ahaz is under attack, the threat it to him and the whole house of David. God assures Ahaz that peace and safety are at hand. The first sign in vs 13, 14, is that there can’t be any attempt to destroy the house of David will fail. The second sign which is seen in verses 15, 16, is given to Ahaz personally. For Ahaz, an event 700 years in the future (about the Messiah) would make no difference to him. So in vs 15-17- the “You” is again singular and specifically for Ahaz. Before Isaiah’s son is old enough to make moral distinctions between right and wrong, the kings of Israel and Syria will be deposed and their threat removed. This was fulfilled within three years. Isaiah again uses the definite article before the term “boy.” This time there is another boy mentioned in the context.: Isaiah’s son. The boy of vs 16 can’t be the son of vs 14, but refers back to Isaiah’s son in vs 3. God promises that the attack upon him by Israel and Syria will not succeed, and before Isaiah’s son Shear-Jashub, reaches an age of moral maturity, the two enemy kings will cease to exist.
Let’s go a little deeper at the Sign to the House of David in Isa. 7:13-14. In Hebrew, there is a clear change between the singular “you” of vs 9, 11, 16, 17, and the plural “you” of verses 13-14. The sign is not just for Ahaz, but for the whole house of David.  In vs 14, we see the word “Behold,” This Hebrew word draws attention to an event which is past, present, or future. However, grammatically, whenever “behold” is used with the Hebrew present participle; it always refers to a future event. That is the case here. Not only is the birth future, but the very conception is future. This is not referring to a pregnant woman about to give birth. The NASB translates it as “a virgin” which is wrong. The NIV and NKJV translate it as “the virgin”- according to the rules of Hebrew grammar, when finding the use of a definite article “the”- the reader should look for a reference in the immediate previous context. Having followed the passage from 7:1, there has been no mention of any woman. Having failed the immediate context, the next rule is called “ the principle of previous reference”- something that which has been dealt with earlier and is common knowledge among the people. 
Duane A. Garrett says the following in his article called, “Type, Typology” in Baker’s Evangelical Dictionary of Theology:
“In typology, the “type” is perhaps the least understood but most important concept in the hermeneutics of biblical prophecy. Typological prophecy occurs throughout the Bible and can be considered the “normal” way that the prophets, including Jesus, spoke of the future. Failure to take this method of speaking into account can lead to gross distortions of the prophetic message.
Typology is often confused with allegorical interpretations and is sometimes wrongly labeled as “double fulfillment.” It also contrasts with what is sometimes called the “literal interpretation.” The idea of a “double-fulfillment” of prophecy is closer to the concept of typology, but as a hermeneutical model it is crude and imprecise. The metaphor of two mountains often accompanies the idea of double-fulfillment. The prophet is said to have seen two separate events in the future juxtaposed like two mountains, one in front of the other. The one event was much closer in time than the other, but he saw the two together through “prophetic foreshortening.” This model does not explain why the two specific events were juxtaposed by the prophet; why two events rather than three, four, or five are juxtaposed; and what the basis for the “foreshortening” is.
The typological interpretation of prophecy asserts that the prophets did not so much make singular predictions as proclaim certain theological themes or patterns and that these themes often have several manifestations or fulfillments in the course of human history. These patterns often have their greatest manifestations in the life of Christ or in the eschaton, but there may be one or more other fulfillments elsewhere in human history, especially in the immediate historical context of the prophet.
The value of typology is twofold. First, it provides an intelligible hermeneutic for dealing with biblical prophecy. The problems of interpreting prophecies, especially those concerning Christ, have often left the interpreter with the unhappy choice of either ignoring the historical and literary context of a passage in order to point the text toward Christ or of focusing exclusively on the historical situation of the prophet with the implication being that the passage in fact has nothing to say about Christ. Faced with this dilemma, some interpreters take Isaiah 7:14 exclusively as a prophecy of the virgin birth of Christ and employ fairly desperate exegesis to explain why Isaiah would make such a prediction in the context of the Syro-Ephraimite war. Others relate Isaiah 7:14 exclusively to its historical context and in effect say that Matthew was wrong to take it as a prophecy of Christ’s birth (Matt 1:23). In typological exegesis, however, the dilemma is not only avoided but is meaningless.”
Translating the word “virgin”
Some scholars view Isaiah 7:14 as having reference only to the natural conception and birth of the son of the prophetess. Some argue that “alma” sometimes translated “virgin” (KJV, ASV, NIV), refers to a young woman, whether married or unmarried, and should be translated “young maiden” (RSV). So if Isaiah had intended someone who was a virgin, he would have used bethulah (cf. Gen. 24:16; Levit. 21:3; Judg. 21:12). But as Fruchtenbaum, notes, “If the women in Isa. 7:14 were a non-virgin, then God would be promising a sign involving fornication and illegitimacy.” 
What we do know is that Matthew is using the Septuagint (The Greek Old Testament ) which uses the word “parthenos” which means “virgin.” The Septuagint written 200 years working before the birth of Jesus, evidently believed that this was a prediction of the virgin birth of the Messiah. It is also true that “parthenos” doesn’t always mean “virgin.” We see this by the Septuagint’s rendering of Gen 34;3 when Dinah is still called a “parthenos” even after she was raped. Amy Jill Levine, an Orthodox Jew who is a specialist in New Testament studies, says the following:
“When, 200 years later, the author of Matthew’s gospel read Isaiah 7:14 in Greek, he saw a prediction of a virginal conception. That is a legitimate reading. Jews, however, reading their Scriptures in Hebrew, see no virginal conception. By applying Isaiah’s prophecy to his own time, Matthew is reading his Scripture in good first-century Jewish fashion. Contemporaneous Jews also took verses out of context and applied them to their own situations.
For example, the well-known Rabbi Akiva, a Jewish teacher executed by the Romans about 135 C.E., is reputed to have said that Bar Kokhba, the leader of the second revolt against Rome (132–135 C.E.), was the fulfillment of Numbers 24:17, “a star shall come out of Jacob, and a scepter shall rise out of Israel” (see the Jerusalem Talmud,Ta’anit 4.8). Similarly, the authors of the Dead Sea Scrolls see the Prophetic volumes from the Scriptures of Israel as speaking directly to their own time and situation. This form of interpretation, known as pesher (Hebrew for “interpretation”), quotes a Biblical text and then shows its fulfillment. For example, 1QpHab, the Habakkuk commentary from Qumran (“1” stands for the cave where the scroll was found, “Q” is Qumran; “p” ispesher, and “Hab” is the abbreviation for Habakkuk), states that “God commanded Habakkuk to write the things that were coming on the last generation, but the fulfillment of the era He did not make known to him … Their interpretation (pesher) concerns the Teacher of Righteousness [the leader of the Qumran group], to whom God made known all the mysteries of the words of His servant the prophets.” The early followers of Jesus, Jews immersed in the Scriptures of Israel, searched in those Scriptures for teachings that would help them understand the man they believed to be the Messiah. At the same time, they used those Scriptures to help them tell the story of his life. In both cases, they were being thoroughly Jewish.” Note: Feel free to read the entire article here
But Why Would Matthew Create a Virgin Birth Story?
Despite the challenges of translation, we are still left to the issue as to why in the word Matthew would even create a story about a Messiah who was born of a virgin. After all, at the time of Jesus, there was no messianic expectation of a Messiah who would be virgin born. So if Matthew is trying to convince his readers Jesus is the promised Messiah, a made up virgin birth story seems counterproductive. As Craig Evans says,
“In other words, there was a tradition about the uniqueness of Jesus’ birth that informed Matthew’s exegesis of Isaiah rather than the text of Isaiah inspiring Matthew’s tradition about the uniqueness of Jesus’ birth. There is no need for a divine messiah, and even if someone thought messiah to be divine, there is no evidence that anyone thought this was possible through a virgin birth alone. Of course, the more skeptical readers of Matthew will not find this argument convincing, but I admit that it is an argument like this one that has caused me to pause when I hear people speak of Matthew creating a virgin birth story. Even if Matthew was being apologetic in defense of Mary’s reputation wasn’t an appeal to Joseph as Jesus’ legitimate father an easier answer than a virgin birth?” –See entire article here:
The Virgin Birth and Paganism
Some skeptics still like to assert the virgin birth story is a rip off of pagan or parallel stories. However, in Raymond E. Brown’s highly respected work, The Birth of the Messiah, he evaluates non-Biblical “examples” of virgin births and his conclusions are as follows:
“Among the parallels offered for the virginal conception of Jesus have beneath conceptions of figures in world religions (the Buddha, Krishna, and those of Zoroaster), in Greco-Roman mythology (Presses, Romulus), in Egyptian and Classical History (the Pharaohs, Alexander, Augusts), and among famous philosophers or religious thinkers (Plato, Apologias of Tyana), to name only a few. “Are any of these divinely engendered births really parallel to the non-sexual virginal conception of Jesus described in the NT, where Mary is not impregnated by a male deity or element, but the child is begotten through the creative power of the Holy Spirit? These “parallels” consistently involve a type of hieros gamos (note: “holy seed” or “divine semen”) where a divine male, in human or other form, impregnates a woman, either through normal sexual intercourse or through some substitute form of penetration. In short, there is no clear example of virginal conception in world or pagan religions that plausibly could have given first-century Jewish Christians, the idea of the virginal conception of Jesus.” 
Believe it nor not, I have still barely scratched the surface on this topic. For more info, see Michael Brown’s Answering Jewish Objections, Vol 3: Messianic Prophecy Objections, or The Virgin Birth by Robert Gromacki.
 Jaques Doukhan, On The Way To Emmaus: Five Major Messianic Prophecies Explained ( Clarksville, MD: Lederer Books, 2012), 30.
 A.G Fruchtenbaum, Messianic Christology: A Study of Old Testament Prophecy Concerning the First Coming of the Messiah (Tustin CA: Ariel Ministries, 1998), 33.
 Ibid, 36.
 A.G Fruchtenbaum, Messianic Christology: A Study of Old Testament Prophecy Concerning the First Coming of the Messiah (Tustin CA: Ariel Ministries, 1998), 36-37.
 Duane A. Garrett “Type, Typology” featured in Walter Elwell, Bakers Evangelical Dictionary of Theology (Grand Rapids, MI: Baker Book House Company, 1996), 785-786.
 Norman Geisler, Bakers Encyclopedia of Christian Apologetics, (Grand Rapids, Baker Books, 1999), 760.
Raymond E. Brown, The Birth of the Messiah: A Commentary on the Infancy Narratives in the Gospels of Matthew and Luke (London:Yale University Press; Updated edition, 1999) 522-523