Place cranberries and apple in food processor and pulse until chopped.
Place mixture in saucepan with water.
Cover and heat on medium-high for about 3 minutes or until mixture begins to boil.
Remove cover and simmer at medium heat for another 3 to 5, minutes stirring occasionally.
Stir until sauce becomes smooth.
Add in sugar and stir for 1 minute.
Remove from heat, pour into a serving dish, and place in the refrigerator for at least 2 hours. (The sauce will keep for days, so it can be made ahead of time.)