The vowel sound in hoed is called a diphthong. This means it is actually two vowel sounds that slur together. As you say the sound, your mouth will get more closed and your lips will get more round. At the end of this sound, you will be making the same vowel sounds as in /u/, and your lips should not be as round as they as when you say "hoot".
Now let's listen to some sounds!
|"hoed" sounds: || |
To practice more /u/ sounds, go to these pages:
The sounds in hoot and hood