In an Australian accent (and I think in standard US and English accents used by actors on TV and in movies), it is said like 'wer' ie. it is pronounced the same 'where' and 'wear', and rhymes with 'bear'/'bare', 'fair', 'rare', 'hair', 'care' and 'lair'. I've heard some American accents say it like 'wir' ie. they say so it rhymes with (except with a much shorter vowel sound) 'beer', 'hear', 'dear'/'deer', 'fear', 'near', 'rear', 'tear' and 'year'.

Depending on the accent and intonation, both can be correct. With a Midwestern US accent, I usually pronounce it like the word "were," but if I want to emphasize that "WE" are doing something, I might pronounce it "weeyer" or say "we are". I think other accents may pronounce it differently though. Here are some online dictionary examples of it being pronounced both ways. Click the speaker button to hear the pronunciation. "Wer": http://www.merriam-webster.com/dictionary/we're "Weeyer": http://dictionary.reference.com/browse/we're?s=t