Rattus is right - you need to take account of resistance.
When I don't have a known X/R, I use typical figures and that gives me the L of about 1.85mH. Not greatly different.
A couple of points here.
First, you need to know if the 120V is an on-load voltage or an-off load voltage. My experience is that it is often the on-load voltage but I'm from the other side of the pond from the majority of posters here. In any case it gives you the starting point for applying voltage drop.
The second point to note is that impedance isn't the same as regulation. The 5% is sometimes referred to as impedance volts and described as that voltage you would need to get full load current to flow into a short circuit.
It's a determining factor in calculating the prospective fault current.
This isn't the same as the regulation i.e. how much the terminal voltage drops on load.
Load power factor makes a significant difference.
I did a few calcs and, for typical loads on your transformer, you might expect about 3% voltage regulation at rated transformer kVA.