Of course. But as the knee moves upward during hip flexion, the psoas is shortened, not lengthened.
Pretty sure that's the adductors you're feeling stretch along the inner thigh. Adductor magnus and gracilis in particular are going to get a really good stretch with the hips rotated anteriorly during a squat.
The psoas major has one main function, and that's to pull the femur toward the lumbar spine:
It's secondary function is rotation of the lumbar spine.
Goblet squats are the bomb, and almost everybody needs to put more focus on arching hard when they squat. When you look at your skeleto-muscular system as a whole and look at the structure of it during the squat, you can see how that lumbar arch evens out the strain and makes everything more solid and stable.
Now, when I say arching hard, I don't mean arching as far as you can. I mean locking it down. Arching too far can cause problems of its own.