The number of transactions in San Francisco is way down, so I'd have to say that sellers are definitely holding back from putting their homes on the market. It's not clear from your question whether you're asking from the perspective of the buyer or seller, so I'll try to answer both ways.
In working with buyers, I can tell you that my clients are nervous. There's a lot of competition for the relatively small selection of homes, so yes, I'd say that potential buyers are either continuing to rent or choosing to live in their current homes until the market is in a more stable position.
In San Francisco, the rental market is very strong right now, but we also have strong rent control and pro-tenant laws that are deterrents to many owners who might consider becoming landlords in other markets. Therefore, I'd say that owners that might prefer to sell but don't have to would most likely not choose to rent instead.