Is it common practice in the US for students to propose master thesis topics themselves, or do labs have a list of topics to pick from?
It's usually somewhere in between: the thesis topic is negotiated between the student and advisor.

Usually an advisor will have some topics already in mind, and can suggest them. The student can also suggest topics in which he or she is interested, and the advisor can decide if they would be appropriate. In the end, of course, they both have to agree.

It could also fall closer to one end of the spectrum or the other, depending on the advising style of the advisor. Some advisors might insist on one of the projects they have in mind, as they may not have the expertise or interest for any of the student's suggested topics. Or they might think the student's suggestions would be too easy, too hard, too obscure, etc. Other advisors may not have many topic ideas of their own, or consider that it is good experience for a student to find their own topic.