Having been a department head, I can tell you he's probably doing this because someone isn't performing up to snuff, and this is a way to make everyone accountable.
Don't fool yourself that your information is private either. If you're using company issued computers and software, they can access or find out what you've been up to if they really needed to...and probably already have been.
I can understand your concern about privacy and being micromanaged, but the fact of the matter is you are an employee of this company though you have the privilege of working off-site. If you were in an office, you'd be on the company's system, and very likely closely watched and managed. So this request isn't out of the realm of normal nor does it overstep what would be expected at any company.
I guess if I were in your shoes, I'd be more concerned about "why" they are pulling in the reigns right now. While it might just be your new boss trying to exercise some authority, the more likely reason behind radical change is because of something going on in the company that is affecting production and performance. Usually changes like this indicate new expectations and demands from higher up the food chain. Are they planning a restructuring or layoffs? If you are in some sort of sales or marketing, is there a problem with production and meeting goals? A move like this would certainly spur competition and therefore boost production and accountability. For all you know, maybe some of the others working from home are slacking and your boss has to build a case so they can find better candidates.
I guess I'd procede with caution and start doing some detective work to find out why there are new changes to how you report and communicate with your company. With that said, I'd do nothing right now. I'd observe and watch the show to see what's coming up next. This is a big picture issue in my opinion...not necessarily a singling out of anyone. Either way though, in this economy, no one, no matter how good they are, is safe. JMO