Why do we say "This is " instead of "This's"?

After a sibilant, "'s" of possession is usually pronounced /ɪz/ ("the mouse's child", "the goose's wings", "the witch's hat".)

Generally, the possessive "'s" and the contraction of "is" or "has" are pronounced the same ("The cat's paw" vs "The cat's sitting outside"). So the likely pronunciation of "The witch's waiting outside" would be pretty well indistinguishable from "The witch is waiting outside", so we treat it as the latter always.

The same applies to "this": "this's" would be indistinguishable from "this is" anyway.

Some people do have an informal contraction this’s, with a much reduced or non-existent vowel in the second syllable, contrasting with a more formal this is with a full vowel in the second syllable. (I’m one of them.) The slight awkwardness of having two sibilants (in this case unvoiced [s] and voiced [z]) in succession probably explains why this contraction is less common than the others.