Following a strong housing recovery throughout the region in 2013, in 2014 New England will continue to experience a significant shortage of inventory and consumers should expect to see higher interest rates as we head into the second half of the year, according to a new report by RE/MAX of New England.

According to the report, single-family, condominium and multi-family home transactions were strong throughout New England in 2013. With the exception of Vermont, which experienced a 3.3 percent decline in multi-family home sales, each state experienced growth in all three categories of transactions.

"The significant improvement in median price we saw in most market segments across the region is the result of reduced inventory," Dan Breault, executive vice president and regional director of RE/MAX of New England, said in a statement. "While interest rates did rise upwards of one point over the summer of 2013, it did not dissuade buyers from moving forward. In fact, it appeared to have the opposite effect of creating competition and driving prices up in key markets."

The report suggests that inventory shortages will continue to plague the market through the coming year, with rising interest rates potentially putting a brake on the price recovery seen across the Bay State this year. Rebounding consumer confidence, however, could help keep buyers in the market.

Strong home sales during 2013, especially in the second half of the year, bode well for the 2014 housing market. "The traditionally slower fall and winter months showed very strong activity in key markets across the region," added Breault. "This is an excellent bellwether of how we can expect the first quarter of 2014 to shape up."