Neither of the alternatives we can most readily, without preconception, take from the passage sits comfortably with modern Christian belief.
One could say that Jesus was acknowledging John the Baptist as greater than himself, because in Mark 10:18 Jesus chides the disciples for regarding him as extraordinarily good, or even divine:
Mark 10:18: And Jesus said unto him, Why callest thou me good? there is none good but one, that is, God.
On the other hand, it is possible to see this passage as declaring that Jesus was not born of a woman. Neither Mark nor John has a nativity story. Many scholars dismiss the virgin birth stories in Matthew and Luke as unhistorical, for example Uta Ranke-Heinemann says in Putting Away Childish Things, page 7, the nativity accounts in the Gospels of Matthew and Luke are, with respect to time, place, and circumstances, a collection of legends. Some also suggest the nativity accounts were added to Matthew and Luke after the original gospels had begun to circulate.
Some decades later, Marcion reworked the Gospel of Luke, apparently removing Luke's story of the birth of Jesus. Shelly Matthews (Perfect Martyr, page 44) says that Marcion espouses the view that Jesus did not suffer a human nativity; for him, Jesus simply appeared as an adult during the fifteenth year of the reign of Tiberius. All this would be interesting but irrelevant if this view originated with Marcion, perhaps sixty years after Matthew was written. However, Shelly Matthews points to scholarship that suggests Marcion knew a 'proto-Luke' gospel, in which the nativity story was absent. Presumably he also knew Matthew so ought to have known of the birth of Jesus if Matthew, as known to him, included this detail.
It is therefore possible that Jesus was claiming to not be one of them that are born of women, and equally possible that this was a confession by him that John the Baptist was greater than himself. There is one more alternative that avoids attempting an exegesis of the passage: perhaps the words reflect something that Jesus may have said, but not very accurately.