Preheat oven to 375°. Grease a 15x10x1-in. baking pan.
In a large bowl, whisk the first five ingredients. In a small saucepan, combine butter and water; bring just to a boil. Stir into flour mixture. In a small bowl, whisk eggs, sour cream and extract until blended; add to flour mixture, whisking constantly.
Transfer to prepared pan. Bake until golden brown and a toothpick inserted in center comes out clean, 18-22 minutes. Cool on a wire rack 20 minutes.
For frosting, combine butter and milk in a large saucepan; bring just to a boil. Remove from heat; gradually stir in confectioners’ sugar and extract. Stir in walnuts. Spread over warm cake.