The majority of strength gains during the first 4 weeks of training are due to neurologic changes in the muscle tissue that allows the muscle you have to function better. After your body has maximized it's strength gains by increasing innervation to the motor units it has to gain strength by increasing the size of the muscle cells.
I'm assuming you guys are using fat calipers to assess your body fat composition. Calipers are not bad, but there is room for a lot of error from measurement to measurement. You need to take the average of a few measurements over a few days and compare them to an average of some later ones to get a good body fat assessment.