The sentence that helps readers determine the story’s setting is:
"The morning mist was completely gone. The sun was strong and bright, intensifying the color of a row of potted marigolds on the front porch of one of the houses."
This description establishes the time of day (morning) and the weather conditions (sunny, mist cleared) while also providing details about the environment (potted marigolds, a house) that contribute to the setting.