Reading App for First Graders?

My Kindle does that.
But if they're reading at level 2/3 why the push? Talk to their teacher. Kids need to master one level before moving on to the next. Sure they may WANT to read up but they need to put in the practice to get there. It's important to teach them not to rush through their work, and to take their time to really become fluent before moving on.
This is something kids are seriously lacking in today's "but I want it now" world. To be successful in school you need to understand how to build foundations FIRST, this is true not only in reading but math and writing and everything else as well.
Besides, you can read longer stories and chapter books TO them. I read bigger, longer books and novels to my kids through 3rd grade. Their teachers continued to read to them as well. That's another way they build comprehension and fluency.

I would check to see if your girls school uses any websites. Some districts use Reading Eggs and Tumblebooks for lower elementary. I know you asked for reading apps. There is one for spelling words called spellingcity. Fun app. I would check out ABCya. I do believe starfall has a reading app. Check the website first and see if your girls/you are interested. There is also fun4thebrain.com/English.html. Check out other school districts websites. There are posted websites teachers use/suggest.

My first grade daughter likes the American Reading Company Bookshelf app. You get six free books and can buy more for about $2. All of the books they offer are at a K-1 reading level. She also likes the Penguin Publishers app. Again, free app and a couple free books and then you can purchase more. I don't agree with how they have their books leveled though. They are higher reading levels than what they have them leveled at.

That said, as a reading specialist I have yet to find a good app for reading. The best way for kids to learn to read is to read lots of fast, fun, and easy books and to have someone read to them. And to talk about books and unusual and/or new words. Have book discussions about books they read or that you read to them. Talk about new words and what they mean. Talk about how you can find out what new words mean without using google or a dictionary. Talk about ways to figure out new words besides just sounding it out (picture clues, what sounds right, what makes sense, etc.). And call me old fashioned, but a real book and a real reader is going to be better than an electronic device.

No matter how much you push, reading is developmental and kids need authentic practice with reading at the appropriate level before they are going to be developmentally ready to read at higher levels. The more kids read and are read to the better readers they will be.

Go to the "Scholastic" website.
And they have "Storia." Which is an app, for books and digital reading.
As you probably know, Scholastic and their books are used in schools and by Teachers.
http://store.scholastic.com/microsite/storia/about?esp=ST...

Many elementary schools have a "technology specialist" or "media specialist" instructor who often knows a lot about specific apps and software. Find that person and make a friend of him or her! Our old school had a tech specialist who knew a lot about content and good apps, not just technology for its own sake.

Also ask the teacher if you feel the teacher is open to using the technology. And don't push too hard -- if they find reading too tough but are being pushed, they may get turned off it. Consult with the teacher about other books for their current reading level and books that will challenge them gradually. And get to know your school librarian for a TON of recommendations - no one knows kids' reading and kids' books like the librarian. Volunteer in the library.