Why did human lifespans drop after the Flood? In Genesis 5, a brief account of the lives of Adam's descendants is narrated. All of them had long lives, for instance, Adam lived 930 years, Seth lived 912 years, etc.

But in Genesis 6:3, God seems to shorten the lifespan of man to 120 years or at least that's what I understood reading that verse. Did I understand it right? How is this fact explained by people who consider Genesis to be literal history?
Answers in Genesis and Creation Ministries International, two young-earth creationist organizations, have similar answers to this question.  They don't attribute a direct supernatural cause, but instead attribute the age drop-off primarily to genetics.

Both cite several factors:


Environmental changes following the flood: probably nothing more than a minor effect, since Noah lived another 350 years after stepping off the ark
Genetic bottleneck at the flood: the gene pool was reduced to eight people, perhaps causing the loss, via genetic drift, of genes contributing to longevity
Possible detrimental mutations: particularly in Shem (who died at a much younger age, 600, than his brothers)
Genetic bottleneck at the Tower of Babel: the gene pool was again divided, potentially having a similar effect as the bottleneck at the flood


Some of the ideas that both reject as insignificant are a change in diet (from vegetarian to omnivorous) and reduced oxygen levels after the flood.

Regarding Genesis 6:3, see this related question.  AIG interprets the verse to mean that God was allowing mankind to live another 120 years before destroying it with a flood:


  We can see that Genesis 6:3 does not deal with the length of time a human will live. Rather, it indicates the longsuffering nature of God in the midst of His wrath. He was allowing even the most evil people of Noah’s time 120 years to repent of their sin before he would judge them with a global flood.




References:


Why Did People Start to Have Shorter Lives After the Flood? (AIG)
Did People Like Adam and Noah Really Live Over 900 Years of Age? (AIG)
Longevity or Countdown? (AIG, on Genesis 6:3)
Living for 900 years (CMI)