Right option:
Sergio decía que hacía frío afuera.
Both the question and the answer stands for the imperfect tense. In general, the imperfect is used to talk about past actions, conditions, or events that occurred regularly or frequently or that were in progress in a moment in the past. So decía comes from the verb decir and hacía comes from the verb hacer. Both conjugations stands for the third person singular in the imperfect.