That's just unfair, inconsiderate and unsustainable, and is also a red flag (ie: I would not go to that company).
Giving up a week of your life for an interview ?
and for free ?
And most importantly - what if ALL companies did this ? you would have to spend months working from home, for free, just to get to the next level of the hiring process .
I don't know what the solution IS, but I know for sure that it IS NOT a 1-week work-from-home-for-free task .
(edit:formatting and some grammar)
Edit2: people will actually pay good money for a yelp (or craigslist/etc/etc) clone on places like upwork. And they asked you to do it for free .