The fire broke out around 3 a.m. on the 4th floor of the building on Grant Avenue, trapping at least half a dozen people and completely gutting the building.
Officials now believe the fire, which killed Hazel Martinez, was caused by an overheated wire.
Investigators say the wiring of a newly-installed stove was pinned against the wall, causing it to overheat and catch fire.
A memorial of flowers, candles and stuffed animals has been set up outside the building for Hazel, while 3-year-old Haley remains critical.
The fire was also fueled by a 5-gallon tank of gasoline left over from Superstorm Sandy.
Heavy black smoke poured from the building, while screams pierced the night.
Neighbors tried to get the family out.
"A lot of screaming, from every which way you see," Good Samaritan Johnnie Capeles said. "Every which way you look, there was somebody screaming. Because it was terrifying. But, you know, it was either help them or they would've burned."
Neighbors said it was awful to see firefighters performing CPR on the two girls, trying to save their lives.
Officials say there were five children and three adults were living in the apartment. A neighbor and five firefighters were also treated for minor injuries.