They probably know your neighbors because you both have the same SSIDs in your vicinity.. I don't see FB not knowing this. Or if you allowed GPS, and neighbors did too, then it's even easier to make the connection.
My co-workers from the office are frequently recommended to me on FB. Since I don't have their number, it must be location based.
You don't need to have their number, if someone else has both of your numbers and has uploaded their contacts list then you're linked in that third party's list. Equally likely it's linked via the wifi SSID or GPS?
If you both use the same wifi, then it could see you as the same IP address and recommend you to each other.