The second most popular topic* amongst expats trying to learn German is how when we try to speak German, especially when out shopping, people start speaking English back to us. It is frustrating as when trying to learn German, you really want to practice and when people speak English you just don’t get the chance to.
The leading theory about why people speak English to us is that our German is so incredibly bad that instead of wanting to struggle through a conversation they speak English so that we will stop murdering their language. However, an encounter at my local currywurst diner made me wonder if people speak English to us because they want us to feel comfortable. I have ordered dinner at my local diner quite often and always in German, but today they spoke English to me. Nothing had changed in how I ordered, but the guy looked so proud when wishing me a good evening in English and I returned the compliment also in English. Perhaps, it is not that our German is so bad that they speak English to us in return but maybe they want us to feel not as alien here in our host country.
I’m going to try thinking positive things when I speak German and people reply in English. It is not that my German is so incredibly bad (even though truthfully it can be pretty woeful) but that the person I’m speaking to wants me to feel at home here.
* The most popular topic amongst expats learning German is German grammar. I have had more conversations about grammar in my three months living in Germany than I have in my entire life. The scary thing is, I have learnt more about grammar when it is taught to me in German than I ever did when it was taught to me in English.
Counting Time 
We used to have a similar problem with Japanese exchange students when I was learning that. They’d want to speak English to us to practice their speaking skills and we’d speak Japanese to them so we could practice ours.
You might have to suck it up regarding the unwanted English from strangers. But with friends, colleagues, acquaintances and other regular-basis types, you might be able to call their attention to it and explain your language-learning intentions to them. And that can be very helpful, but my experience shows that that has to happen very early in the relationship establishment (so, given that we’re talking about Germans, it won’t be your friends of whom you make this request — they aren’t your friends yet!).
Experience also shows that you can’t always count on that support from the regular-basis types. Some people (and this confounds me) are apparently so profoundly language unaware (and that doesn’t necessarily mean that they’re particularly good at it) that even when they start a sentence in German, they look at me and some subconscious switch flips in their brain and they are powerless to stop the English from spilling out. This happens over and over and over again with a really nice guy named B. whose boss S. for three years was a Nix-Deutsch-Amerikaner (and I knew S. well from our days working together at the same company in the U.S.). But somehow everytime B. started a sentence directed at me, even if he started it in German, he finished it in English. And I’d only ever spoken German with him. I think he was projecting his language relationship with S. onto me.
Viel Glück!
Seems the best way to get around this (in the cases where you don’t think it’s because someone’s just trying to make you feel comfortable and it doesn’t bother you) is to stubbornly only speak German back to them. That’s the way I approached it anyway. I had some friends when I first moved here who were really intent on practicing their English on me, so we agreed that they would speak English to me and I would reply in German. All that switching back and forth kind of turns your brain into applsauce, but it worked in the short term. I’ve encountered some other problems more recently. Mostly that I feel really really weird speaking English with my German friends when, say, people are around who only speak English and we need to use that language to include them. And I feel even weirder when I land in a situation where there are other English native speakers there and everyone is speaking German. Nothing feels more bizarre than talking to a British dude in German, tell you what.
I think you might be on to something that Germans who reply to you in English just want to make you feel at home and comfortable. I also think it has to do with the fact that most Germans had English in school (especially the younger generations) and want to practice their English ;)
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