Prepare the dough: In a small bowl, combine warm milk with yeast and 1 teaspoon of sugar. Let it sit for 5–10 minutes until foamy. In a large mixing bowl, whisk together flour, remaining sugar, and salt. Add softened butter, eggs, honey, and the yeast mixture. Mix until a sticky dough forms. Knead by hand or with a stand mixer for 8–10 minutes until smooth and elastic.

First rise: Place the dough in a lightly greased bowl, cover with a damp towel or plastic wrap, and let it rise in a warm spot for 1–1.5 hours, or until doubled in size.

Prepare the filling: While the dough rises, mix melted butter, honey, cinnamon, and chopped nuts in a small bowl. Stir until smooth and set aside.

Shape the babka: Once the dough has risen, punch it down gently and roll it out on a lightly floured surface into a rectangle about 12×16 inches. Spread the honey filling evenly over the dough, leaving a small border around the edges. Roll the dough tightly from the long side into a log. Using a sharp knife, slice the log lengthwise down the middle, exposing the swirls of filling. Twist the two halves together, keeping the cut sides facing up, and place into a greased loaf pan.

Second rise: Cover the loaf loosely with a towel and let it rise for another 30–40 minutes while preheating the oven to 350°F (175°C).

Bake the babka: Bake in the preheated oven for 35–40 minutes until golden brown and cooked through. If the top browns too quickly, cover loosely with foil for the last 10 minutes. Remove from the oven and let cool in the pan for 10 minutes, then transfer to a wire rack.

Prepare the cream cheese frosting: While the babka cools, beat softened cream cheese and butter together until smooth. Add powdered sugar and vanilla extract, mixing until creamy and spreadable.

Frost the babka: Once the babka is completely cool, drizzle or spread the cream cheese frosting over the top, letting it fall naturally into the swirls for an indulgent look. Slice and serve.