Place large saucepan on stovetop over medium-low heat. Add ½ cup water and 1 ½ cups granulated sugar to saucepan, then slowly whisk ingredients together until sugar has dissolved completely, approximately 5 minutes.
Once sugar has dissolved, increase heat under saucepan to medium-high. Let syrup come to boil, then boil syrup just until golden, approximately 10 to 12 minutes. Occasionally, brush down sides of pan with pastry brush dipped into water to prevent or stop any crystallization. Swirl pan as needed if sugar clumps.
When syrup is golden, reduce heat under saucepan to low and remove saucepan from heat. Add 3 tablespoons unsalted butter to saucepan and whisk to incorporate.
Once butter is incorporated, gradually add 1 cup whipping cream in small increments while whisking constantly. Mixture will bubble vigorously with each addition. Repeat until all cream has been added and incorporated.
After whipping cream is added, return saucepan to low heat. Gently stir mixture until sauce is completely smooth.
Carefully transfer caramel sauce to jar or serving container. Allow sauce to cool to lukewarm temperature before serving.