Yes, crowding the pan significantly affects the sear by lowering the pan's temperature and steaming the food instead of searing it. This results in a pale, unevenly cooked surface.
When you add food to a hot pan, the temperature of the pan drops. A proper sear requires high heat to quickly brown the surface of the food through the Maillard reaction. If you overcrowd the pan, the food releases moisture, further lowering the pan's temperature. This excess moisture then steams the food instead of searing it. The result is a less desirable texture and flavor, as the Maillard reaction, responsible for the rich, savory flavors of a good sear, cannot occur effectively at lower temperatures. To achieve a good sear, ensure there's enough space between each piece of food in the pan to maintain high heat and allow moisture to evaporate quickly. Cook in batches if necessary.
Use a heavy-bottomed pan like cast iron or stainless steel for better heat retention. These pans recover their temperature more quickly after adding food, minimizing the impact of crowding.