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 sentence provides specific details about the time of day (morning) and the weather (sunny, with no mist), as well as a description of the environment (potted marigolds on a porch), which together create a vivid picture of the setting.